The Most Important Consideration in Evaluating the Fairness of the Amounts

question 91

Multiple Choice

The most important consideration in evaluating the fairness of the amounts accrued for holiday pay, sick pay, and other benefits is the:

• A) profitability of the client which will enable these liabilities to be met.
• B) actual expense incurred for the prior period.
• C) consistent accrual of these liabilities in accordance with relevant agreements or legislation.
• D) amount expended to date in the current period.

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Definitions:

First Department

A term often used in process costing that refers to the initial stage or department through which materials pass in the production process.

Equivalent Units

A concept in cost accounting used to calculate the number of units of production expressed in terms of fully completed units.

Materials

Raw substances or components used in the manufacturing process to create products.

Equivalent Units

A concept used in cost accounting to convert the amount of work done on partially finished goods into the number of fully completed units.