Which of the Following Activity Bases Would Be the Most

question 104

Multiple Choice

Which of the following activity bases would be the most appropriate for food costs of a hospital?

• A) Number of cooks scheduled to work
• B) Number of x-rays taken
• C) Number of patients who are admitted in the hospital
• D) Number of scheduled surgeries

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Definitions:

Equity Method

An accounting technique used to record investments in other companies, where the investment is initially recorded at cost and subsequently adjusted to reflect the investor’s share of the investee’s net income or loss.

Initial Value Method

An accounting approach that records investments at their original purchase cost, without adjusting for changes in market value.

Partial Equity Method

An accounting technique used for investments where the investor has significant influence but does not fully control the investee, recognizing income proportionate to the level of ownership.

Equity Method

An accounting technique used to record investments in which the investor has significant influence but no control over the investee, recognizing the investor's share of the investee's profits and losses.