Which Defining Word or Phrase Below BEST Captures the Meaning

question 53

Multiple Choice

Which defining word or phrase below BEST captures the meaning of capital items?

• A) Bulk loads
• B) Directly used in the production process
• C) To the consumer within a year
• D) Longer lasting
• E) Governmental purchase

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Definitions:

Absorption Costing

A financial recording approach that encompasses all production expenses, such as direct materials, direct labor, and overhead costs, within the price of a product.

Net Operating Income

Income from normal business operations after subtracting operating expenses but before interest and taxes.

Fixed Manufacturing Overhead

Expenses related to manufacturing that remain constant regardless of the level of production, such as building lease payments and equipment depreciation.

Deferred Inventories

Inventory costs that are not expensed in the period they are incurred but are deferred to a future period.