One of the Reasons That Companies Allocate Costs Is to Encourage

question 39

True/False

One of the reasons that companies allocate costs is to encourage managers to use externally provided services, rather than those that are internally provided.

---

Definitions:

Journal Entries

The record of financial transactions in an accounting system, entered as debits and credits to various accounts.

Loss

The financial result of an operation or transaction where expenses exceed revenues.

Significant Influence

The power to participate in the financial and operating policy decisions of another entity, but not control those policies, typically associated with ownership of 20% to 50% of voting shares.

Net Income

The total earnings of a company after subtracting all expenses from revenues, including taxes and operating expenses.