Which of the Following Is Not True Regarding Standards for Interim

question 61

Multiple Choice

Which of the following is not true regarding standards for interim reporting?

• A) Declines in inventory value should be deferred to future interim periods.
• B) Use of the gross margin method for computing cost of goods sold must be disclosed.
• C) Costs and expenses not directly associated with interim revenue must be allocated to interim periods on a reasonable basis.
• D) Gains and losses that arise in an interim period should be recognized in the interim period in which they arise if they would not normally be deferred at year-end.

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Definitions:

Ending Inventory

The value of goods available for sale at the end of an accounting period, calculated through a physical count or accounting methods.

Unit Sales

The quantity of items that have been sold within a particular timeframe.

JIT Policy

Just-In-Time policy, a strategy that aims to improve a business's return on investment by reducing in-process inventory and related carrying costs.

Variable Overhead

Costs that vary with the level of output or production activity, such as materials and labor.