Under Both Private Entity GAAP and IFRS

question 44

Multiple Choice

Under both private entity GAAP and IFRS,

• A)the earnings approach to revenue recognition is followed.
• B)all of these
• C)the percentage of completion methods are allowed.
• D)warranty costs are accrued.

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Definitions:

Period Costs

Expenses that are not directly tied to the production process and are expensed in the period they are incurred, such as selling, general, and administrative expenses.

Conversion Costs

The sum of labor costs and overhead costs associated with the manufacturing process, used to convert raw materials into finished products.

Factory Overhead Costs

Indirect manufacturing costs that are not directly tied to the production of goods, such as utilities, maintenance, and management salaries.

Materials Purchased

The raw materials acquired by a company for use in the production or manufacturing of its goods.