An Assumption About Cost Flow Is Necessary

question 139

Multiple Choice

An assumption about cost flow is necessary

• A) because it is required by the income tax regulation.
• B) even when there is no change in the purchase price on inventory.
• C) only when the flow of goods cannot be determined.
• D) because prices usually change, and tracking which units have been sold is difficult.

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Definitions:

Ideal Standards

Benchmark levels of performance set at the highest achievable conditions without allowances for normal inefficiencies.

Master Budget

The Master Budget is a comprehensive financial planning document that consolidates all of a business's individual budgets, providing a complete financial overview for a future period.

Standard Cost

A predetermined cost of manufacturing, distributing, and selling a product that serves as a benchmark for measuring performance.

Budgeted Cost

An estimated cost for planned transactions or activities, often used in budgeting processes for performance evaluation and planning purposes.