As the Number of Activities in an ABC System Increases

question 72

Multiple Choice

As the number of activities in an ABC system increases, measurement error tends to:

• A) Decrease
• B) Increase
• C) Remain the same
• D) Make it difficult to identify the cost driver

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Definitions:

Total Share

The aggregate number of shares that represents ownership in a company, including both common and preferred stock.

Net Income

The amount of money remaining after all operating expenses, taxes, and interest have been deducted from total revenue.

Income Distribution

Refers to the manner in which total income is divided among the holders of different types of financial securities and assets.

Hybrid Method

An accounting technique that combines elements of both cash-based and accrual accounting to prepare financial statements.