The System Where Every Transaction Affects at Least Two Components

question 57

Multiple Choice

The system where every transaction affects at least two components of theaccounting equation is known as:

• A) historical cost accounting.
• B) the going concern system.
• C) the accounting entity system.
• D) double-entry accounting.

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Definitions:

Predetermined Overhead Allocation Rate

A rate used to apply manufacturing overhead to products or job orders, calculated based on estimated overhead costs and activity levels before production begins.

Process Costing

An accounting methodology used in manufacturing where costs are assigned to batches or work units, typically used for homogenous products.

Factory Overhead

All indirect costs associated with manufacturing, excluding direct materials and direct labor costs.

Period End

The conclusion of a financial accounting period, at which time the books are closed and financial statements are prepared.