In Service Industries

question 68

Multiple Choice

In service industries

• A) activities cannot be labeled as value-added or non-value-added.
• B) the overall objective of ABC is different than in manufacturing industries.
• C) a larger proportion of overhead costs are company-wide costs.
• D) activity cost pools cannot be identified.

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Definitions:

Equipment Purchase

Equipment purchase refers to the acquisition of physical assets, such as machinery or tools, necessary for a company to operate and produce goods or provide services.

Operating Activities

Transactions and events that relate to the core business functions, such as receipts from sales of goods and services, payments to suppliers, and salaries to employees.

Depreciable Asset

A type of asset that loses value over time due to wear and tear, decay, or obsolescence, which can be accounted for through depreciation.

Indirect Method

A method of preparing the cash flow statement in which net income is adjusted for non-cash transactions and changes in working capital.