An Actual Cost System Differs from a Normal Cost System

question 11

Multiple Choice

An actual cost system differs from a normal cost system in that an actual cost system

• A)assigns overhead as it occurs during the manufacturing cycle.
• B)assigns overhead at the end of the manufacturing process.
• C)does not assign overhead at all.
• D)does not use an Overhead Control account.

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Definitions:

Retained Earnings

The cumulative earnings of a company that have not been distributed to shareholders as dividends, reinvested back into the company.

Unearned Revenue

Money received by a company from a customer for products or services to be delivered or performed in the future.

Prepaid Rent

Prepaid rent refers to payments made in advance for rent, recorded as an asset on the balance sheet until it is consumed or the rental period elapses.

Notes Payable

Financial obligations or loans evidenced by promissory notes that a company or individual owes and is required to pay in the future.