When Allocating Costs to Value Inventory, What Is the Underlying

question 17

Multiple Choice

When allocating costs to value inventory, what is the underlying reason why firms allocate rather than directly measure capacity costs?

• A)Traceability.
• B)Profitability.
• C)Responsibility.
• D)Reliability.
• E)None of the above.

---

Definitions:

Loss On Redemption

The loss incurred when a debt obligation or security is redeemed before its maturity date at a value less than the original purchase price or par value.

Carrying Amount

The balance of the bonds payable account (face amount of the bonds) less any unamortized discount or plus any unamortized premium.

Unamortized Discount

The portion of a bond's face value that has not yet been expensed as interest over time to reflect the bond being issued below its par value.

Redeemed

The act of paying off or buying back something, such as repaying a bond or exchanging a coupon for goods.