Which of the Following Is True of a Company That

question 375

Multiple Choice

Which of the following is true of a company that uses absorption costing?

• A) Net operating income fluctuates directly with changes in sales volume.
• B) Fixed production and fixed selling costs are considered to be product costs.
• C) Unit product costs can change as a result of changes in the number of units manufactured.
• D) Variable selling expenses are included in product costs.

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Definitions:

Statement Of Income Accounts

A financial report that shows a company's revenues, expenses, and net income over a specific period, highlighting its profitability.

Accounting Cycle

Describes the systematic process of recording and processing all financial transactions of a company, from when the transaction occurs to its representation in the financial statements.

Adjusting Entries

Documentation of transactions at the conclusion of a financial cycle to accurately apportion profits and costs to the period they were realized.

Adjusted Trial Balance

A list of all accounts and their balances after adjustments are made, used to prepare financial statements.