Which Statement Is True Concerning the Variance Accounts in a Standard

question 72

Multiple Choice

Which statement is true concerning the variance accounts in a standard costing system?

• A) They cause the general ledger to be out of balance.
• B) They appear on the balance sheet as adjustments to Work in Process Inventory.
• C) They are temporary accounts and are closed before financial statements are prepared.
• D) They have debit balances prior to closing.

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Definitions:

Low Risk Projects

Investments or projects that are considered to have a lower probability of resulting in a financial loss.

Investor Risk Aversion

The tendency of investors to prefer lower-risk investments to avoid potential losses.

WACC

Weighted Average Cost of Capital, a calculation of a firm's cost of capital in which each category of capital is proportionately weighted.

Appropriate Discount Rate

The rate used to discount future cash flows to their present value to account for risk and time value of money, reflecting the opportunity cost of capital.