The Underlying Principle of Allocating Direct Operating Expenses to Departments

question 175

True/False

The underlying principle of allocating direct operating expenses to departments is to assign to each department an amount of expense proportional to the revenues of that department.

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Definitions:

Premium on Bonds Payable

The amount by which the bond's selling price exceeds its face value.

Carrying Value

The book value of assets and liabilities on a company's balance sheet, reflecting the historical cost of assets minus accumulated depreciation.

Convertible Bonds

Bonds that can be converted into a predetermined number of the issuing company's shares at certain times during its life, usually at the discretion of the bondholder.

Carrying Value

The book value of an asset or liability on a company's balance sheet, calculated as the original cost minus accumulated depreciation or amortization.