Nathan Reports Profits When Cash Is Received and Expenses When

question 54

Multiple Choice

Nathan reports profits when cash is received and expenses when they are paid.He is using:

• A)a statement of cash flows.
• B)accural-basis accounting.
• C)cash-basis accounting.
• D)liquid assets.

---

Definitions:

Equivalent Units

A concept in cost accounting that is used to allocate costs to the production process when there is more than one stage of production, converting work-in-process into complete units of output.

Direct Labor Costs

These are wages and benefits paid for the labor directly involved in the manufacturing of products.

Processing Departments

Units or sections in a manufacturing environment where specific processes are completed, contributing to the production of goods.

Conversion Costs

The combined costs of direct labor and manufacturing overheads that are incurred in transforming materials into finished goods.