Expenses Can Be Matched Against Revenue

question 181

Multiple Choice

Expenses can be matched against revenue

• A)if the earnings process is not complete.
• B)when cash is collected from the sale of products.
• C)through allocation to the accounting periods in which the benefits are recognized.
• D)when payment is made for costs related to revenue.

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Definitions:

Schedule Of Cost Of Goods Manufactured

A schedule that contains three elements of product costs—direct materials, direct labor, and manufacturing overhead—and that summarizes the portions of those costs that remain in ending Work in Process inventory and that are transferred out of Work in Process into Finished Goods.

Direct Materials Cost

The cost of raw materials that are directly traceable to the production of a specific product or service.

Manufacturing Overhead

All manufacturing costs other than those accounted for as direct labor and direct materials. Includes indirect costs such as maintenance, utilities, and rent in the production process.

Indirect Materials

Materials used in the production process that cannot be directly linked to specific products, such as lubricants and cleaning supplies.