Which of the Following Is Not True of Activity Cost

question 104

Multiple Choice

Which of the following is not true of activity cost drivers?

• A)They are measures of the underlying activity that occurs in each activity cost pool.
• B)They ideally have a cause and effect relationship with underlying activities.
• C)They are strictly volume-based allocation measures.
• D)They are used in Stage 2 cost allocations.

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Definitions:

Purchases Journal

The purchases journal is a specialized accounting ledger that tracks all purchase transactions of a business, including inventory purchases on credit.

Supplies Account

An account in the general ledger that records the amount spent on supplies that are used in the operation of a business.

General Journal

A ledger where all financial transactions of a business are initially recorded using double-entry bookkeeping.

Purchases Journal

A financial journal used to record all purchases of goods and services on credit.