Which of the Following Is True of Activity-Based Costing

question 12

Multiple Choice

Which of the following is true of activity-based costing?

• A) More cost pools
• B) Same base as traditional costing
• C) Less costly to use
• D) Eliminates arbitrary allocations

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Definitions:

Cumulative Nonparticipating Preferred Stock

Preferred stock that accumulates unpaid dividends, which must be paid out before dividends can be distributed to common stockholders, but does not participate beyond the fixed dividend.

Cash Dividends

A redistributive payment of a portion of a company's earnings, made in cash, to its shareholders.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, equal to the share capital plus retained earnings.

Premium

An additional amount over the normal cost, or the portion of insurance payments above the cost of the insured risk.