The Economic Entity Assumption Requires That the Activities

question 86

Multiple Choice

The economic entity assumption requires that the activities

• A) of different entities can be combined if all the entities are corporations.
• B) must be reported to the Securities and Exchange Commission.
• C) of a sole proprietorship cannot be distinguished from the personal economic events of its owners.
• D) of an entity be kept separate from the activities of its owner.

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Definitions:

Job Costing

A cost accounting method that accumulates costs individually for each job rather than for a set period of time.

Service Costs

Expenses associated with providing services to customers, including labor, materials, and overhead costs.

Actual Cost Analysis

The process of examining the real and total costs incurred in the production of goods or provision of services, after the fact, to ensure accurate costing and pricing.

Indirect Costs

Expenses that are not directly traceable to a product, service, or project, such as rent, utilities, and administrative salaries.