The Managers of Financial Burden Ltd Are Analysing Some of Their

question 49

Multiple Choice

The managers of Financial Burden Ltd are analysing some of their corporate costs to determine the costs of each department's use of administrative services. The accountant wants to allocate the costs of payroll processing using an activity-based costing system. The most appropriate cost driver for the payroll processing cost pool is the:

• A) Current tax rate for employees
• B) Total number of deductions from an individual employee's pay
• C) Number of pay periods each month
• D) Number of employees

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Definitions:

Prepaid Insurance

An asset account representing insurance payments made in advance for coverage that extends to future periods.

Accrued Revenue

Revenue that has been earned but not yet received in cash or recorded, representing goods or services provided to a customer in one accounting period that are paid for in a later period.

Adjusting Entry

Journal entries made at the end of an accounting period to update account balances before preparing financial statements, ensuring they reflect the true financial position.

Service Revenue

Income earned by a company for the services it provides to customers, excluding revenue from the sale of goods.