A Direct Cost Is One Which

question 97

Multiple Choice

A direct cost is one which

• A)involves an actual outlay of cash for a specific cost object.
• B)can be traced to a specific cost object.
• C)cannot be traced to a specific cost object.
• D)is not worth the effort of tracing to a specific cost object.

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Definitions:

Subsidiary

A company controlled by another company, often referred to as the parent company.

Fair Value

The likely receipts from offloading an asset or the expenditure to relocate a liability, in a systematic transaction at the market rate on the day of valuation.

Initial Value Method

An accounting method where investments are recorded at their acquisition cost without subsequent change except for impairments and certain adjustments.

Full-Accrual Totals

A method of accounting that records revenues when earned and expenses when incurred, regardless of when cash transactions occur.