Which of the Following Research and Development Related Costs Should

question 60

Multiple Choice

Which of the following research and development related costs should be capitalized and amortized over current and future periods?

• A)Research and development general laboratory building which can be put to alternative uses in the future
• B)Inventory used for a specific research project
• C)Administrative salaries allocated to research and development
• D)Research findings purchased from another company to aid a particular research project currently in process

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Definitions:

Accrual Accounting

An accounting method where transactions are recorded when they are earned or incurred, rather than when cash is exchanged, providing a more accurate financial picture.

Adjusting Process

The adjusting process in accounting involves making entries at the end of an accounting period to allocate income and expenses to the period in which they actually occurred.

Accrued Revenues

Revenues earned by a company for goods or services provided but not yet billed or paid for by the customer.

Cash Receipts

The collection of cash during a specific time period, typically from sales or other transactions.