In Recording Business Transactions Evidence That an Accounting Transaction Has

question 156

Multiple Choice

In recording business transactions evidence that an accounting transaction has taken place is obtained from

• A) business documents.
• B) the Internal Revenue Service.
• C) the public relations department.
• D) the SEC.

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Definitions:

Machine-Hours

A measure of production time, calculated by multiplying the number of machines by the hours they are in operation.

Predetermined Overhead Rate

The rate calculated prior to the accounting period that is used to apply overhead costs to products or job orders, based on estimated costs and activity levels.

Machine-Hours

A measure of production time or activity, where one machine-hour represents the operation of a machine for one hour.

Direct Labor-Hours

The total hours worked by employees directly involved in the manufacturing process, used as a basis for applying labor costs to products.