Which of the Following Is Not Classified Properly as a Current

question 118

Multiple Choice

Which of the following is not classified properly as a current asset?

• A) Supplies
• B) Debt investments
• C) A fund to be used to purchase a building within the next year
• D) A receivable from the sale of an asset to be collected in two years

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Definitions:

Traditional System

A cost accounting system that allocates overhead based on a single or few measures of activity, such as direct labor hours or machine hours.

Predetermined Overhead Rate

A rate used to apply manufacturing overhead to products, calculated before the period begins based on estimated costs and activity levels.

Direct Labor Cost

The expense associated with labor directly involved in the manufacturing of a product.

Direct Labor-Hours

The cumulative hours spent by workers actively engaged in creating a product during the manufacturing stage.