If a Long-Lived Asset Is Sold and the Carrying Amount

question 22

Multiple Choice

If a long-lived asset is sold and the carrying amount is higher than the proceeds received,

• A) profit will be increased.
• B) profit will be decreased.
• C) there will be no effect on profit.
• D) the current ratio will increase.

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Definitions:

Process Costing

A costing method used in mass production where costs are assigned to processes or departments, not individual units.

Conversion Costs

The total expense required to convert raw materials into finished goods, including labor and overhead costs.

Process Costing

An accounting methodology that traces and accumulates direct costs, and allocates indirect costs of a manufacturing process, to calculate the total cost of manufacturing a product.

Weighted-Average Method

An inventory costing method that calculates the cost of goods sold and ending inventory based on the average cost of all goods available for sale during the period.