Which of the Following Is True of a Company That

question 375

Multiple Choice

Which of the following is true of a company that uses absorption costing?

• A) Net operating income fluctuates directly with changes in sales volume.
• B) Fixed production and fixed selling costs are considered to be product costs.
• C) Unit product costs can change as a result of changes in the number of units manufactured.
• D) Variable selling expenses are included in product costs.

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Definitions:

Chart of Accounts

An organized list of all the accounts in a company's general ledger which are used to categorize transactions.

Ledger

A comprehensive collection of all accounts and financial transactions of a company, organization, or individual.

Account Numbers

Unique identifiers assigned to individual accounts in an organization's chart of accounts, facilitating accurate recording, classification, and reporting of financial transactions.

Normal Credit Balances

Accounts with a credit balance as expected in the accounting equation; for instance, liabilities, equity, and revenue accounts normally have credit balances.