Use of Modified Accrual Accounting

question 6

Multiple Choice

Use of modified accrual accounting:

• A) eliminates the need for keeping track of encumbrances during budget execution.
• B) records expenditures when contractual payments are made.
• C) records expenditures when materials are delivered
• D) requires immediate depreciation of all capital assets.

---

Definitions:

Income Statement

A report that outlines an organization's earnings and costs for a set period, culminating in a net gain or shortfall.

Factory Overhead

All indirect costs associated with manufacturing, excluding direct materials and direct labor costs, such as utilities and rent for the factory.

Indirect Labor

Labor costs of workers who assist in or facilitate the manufacturing process but do not directly work on the product.

Prime Costs

Direct materials and direct labor costs that are directly associated with the production of goods.