Which of the Following Describes the Differences Between Job-Order and Process

question 10

Multiple Choice

Which of the following describes the differences between job-order and process costing?

• A)Job-order costing is used in financial accounting, while process costing is used in managerial accounting.
• B)Job-order costing can only be used by manufacturers; only service enterprises use process costing.
• C)Job-order costing is voluntary, while process costing is required by GAAP.
• D)Job-order costing traces costs to jobs, while process costing traces costs to departments and averages the costs among the units worked on during the period.

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Definitions:

Adjustment

Modifications made to account balances in order to correct financial statements or to allocate transactions correctly.

Accrual Accounting

An accounting method that recognizes revenue and expenses when they are incurred, not necessarily when cash is exchanged, enhancing the accuracy of financial statements.

Financial Statements

Formal records of the financial activities and position of a business, organization, or person, including balance sheets, income statements, and cash flow statements.

Adjusting Entries

Journal entries made in accounting to update the accounts and bring them to their correct balances before the preparation of financial statements.