Which Basic Assumption May NOT Be Followed When a Firm

question 15

Multiple Choice

Which basic assumption may NOT be followed when a firm in bankruptcy reports financial results?

• A) economic entity assumption
• B) going concern assumption
• C) periodicity assumption
• D) monetary unit assumption

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Definitions:

Variable Overhead Item

Costs that vary with the level of production output, such as utilities or materials, and are not fixed over the short term.

Rate Variances

The difference between the actual rate paid for inputs and the standard rate expected, often analyzed for labor or overhead rates.

Efficiency Variances

The difference between the actual amount of an input used and the expected (or standard) amount needed, multiplied by the standard cost per unit of input.

Landing Gears

A critical aircraft component that supports the plane during landing and takeoff.