Which of the Following Is NOT True About Generally Accepted

question 60

Multiple Choice

Which of the following is NOT true about generally accepted accounting principles (GAAP) ?

• A) They are outlined in Statements of Financial Accounting Standards.
• B) In the United States, they are issued by the Financial Standards Accounting Board.
• C) They are stringent, giving firms little latitude in reporting financial situations.
• D) Two firms that both follow GAAP can still have significant differences in how they compute their financial outcomes.

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Definitions:

Manufacturing Overhead

Indirect factory-related costs that are incurred when a product is manufactured, including costs related to utilities, depreciation, and salaries for management.

Adjusted Cost

Adjusted cost refers to the original cost of an asset after adjustments for improvements, depreciation, or amortization, directly affecting its value on the balance sheet.

Direct Materials

The cost of raw materials and components used directly in the production of goods.

Indirect Materials

Materials used in the production process that cannot be directly traced to the final product, such as lubricants and cleaning supplies, and are classified as overhead costs.