The Accounting Concepts That Underlie the Accrual System of Accounting

question 1

Multiple Choice

The accounting concepts that underlie the accrual system of accounting are

• A)debits and credits.
• B)revenue recognition and matching.
• C)revenue recognition and debits equal credits.
• D)matching and deferrals.

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Definitions:

Machine-Hours

A measure of production time that indicates the total hours a machine is in operation during a specific period.

Forming Department

A segment within a manufacturing facility where raw materials are shaped and formed into products.

Assembly Department

A segment of a manufacturing site dedicated to constructing end products from various components.

Predetermined Overhead Rate

A rate calculated before a period begins, used to allocate manufacturing overhead costs to products based on a certain activity base, such as labor hours or machine hours.