What Is the Major Difference Between ABC and ABM

question 46

Multiple Choice

What is the major difference between ABC and ABM?

• A)ABC is used in managerial accounting, while ABM is used in financial accounting.
• B)ABC focuses on measurement, while ABM focuses on control.
• C)The goal of ABC is to accurately control costs, while the goal of ABM is to allocate costs most effectively to cost objectives.
• D)There is no difference; ABC and ABM are two names for the same thing.

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Definitions:

Revenue Expenditures

Operating expenses that are fully expensed in the accounting period when incurred and primarily related to the maintenance and repair of assets.

Balance Sheet Expenditures

Expenses that are reflected in the balance sheet, usually through an adjustment of assets or liabilities.

Commercial Substance

A concept that an economic transaction has a significant impact on the future cash flows of a company, justifying its recognition.

Plant Assets

Long-term tangible assets, such as buildings, machinery, and equipment, used in the operation of a business and not intended for resale.