What Is the Best Way to Validate Costs

question 32

Multiple Choice

What is the best way to validate costs?

• A) Validating costs is not necessary.
• B) Adjust your business model.
• C) Ask your customers.
• D) Compare your balance sheet with your competitors' balance sheets.
• E) Compare your common-sized income statement with the industry averages or some benchmark companies.

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Definitions:

Lubrication

The process or action of applying a substance (such as oil or grease) to minimize friction and wear between mechanical parts.

Sales Tax

Sales Tax is a tax paid to a governing body for the sales of certain goods and services, collected by the retailer at the point of purchase.

Depreciable Cost

The total cost of a tangible fixed asset minus its estimated salvage value at the end of its useful life.

Revised Annual Depreciation

An updated calculation of depreciation expense for an asset, altering the original depreciation schedule due to changes in estimation of useful life or resale value.