Which of the Following Expenditures Would Be Most Suspicious If

question 37

Multiple Choice

Which of the following expenditures would be most suspicious if it were capitalized?

• A) Equipment purchases
• B) Computer purchases
• C) Prepaid expenses
• D) Salaries to the top management

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Definitions:

Machine-Hours

A measure of the amount of time a machine is operated within a given period.

Direct Labor-Hours

The total hours worked by employees who are directly involved in the production process.

Predetermined Overhead Rate

A rate calculated before a period begins, used to allocate estimated overhead costs to products based on a predetermined activity base.

Machine-Hours

A measure of the amount of time machines are operated in the production of goods or services, used as a basis for allocating manufacturing costs.