For a Cost or Revenue to Be Relevant to a Particular

question 28

Multiple Choice

For a cost or revenue to be relevant to a particular decision, the cost or revenue must

• A)differ between the alternatives being considered.
• B)be a past cost.
• C)be a future cost.
• D)Both a and c above are correct.

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Definitions:

Ordinary Repairs

Ordinary repairs are routine maintenance expenses undertaken to maintain the efficiency and operating condition of an asset but do not significantly extend its life.

Maintenance Costs

Expenses incurred to keep property, equipment, or machinery in efficient operating condition and repair.

Productive Asset

Assets that are used by a business to generate revenue, which can include physical property, equipment, and machinery, among other items.

Residual Value

The estimated amount that an asset is expected to realize upon the end of its useful life after all depreciation or amortization has been accounted for.