Which of the Following Partnerships Can Use the Cash Method

question 20

Multiple Choice

Which of the following partnerships can use the cash method of accounting?

• A)a CPA firm with average revenues of $30 million
• B)a chocolate manufacturer with average revenues of $30 million
• C)Both of the partnerships can elect the cash method of accounting.
• D)Neither of the partnerships can elect the cash method of accounting.

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Definitions:

Direct Material Price Variance

The difference between the actual cost of direct materials used and the expected (or standard) cost, which can indicate efficiency in purchasing materials.

Standard Costing

A cost accounting method that uses standard costs for direct materials, labor, and overhead to help managers control costs by comparing expected costs to actual costs.

Isolating Variances

A process in managerial accounting for identifying and analyzing differences between actual and expected performance.

Direct Materials

Raw materials directly traceable and assignable to a manufactured product as it is being produced.