Ignoring a Write-Off of Inventory Because It Will Not Make

question 94

Multiple Choice

Ignoring a write-off of inventory because it will not make a difference to financial statement users is an example of:

• A)conservatism.
• B)consistency.
• C)materiality.
• D)entity.

---

Definitions:

Variable Selling Costs

Costs that vary directly with the volume of units sold, such as commissions and shipping expenses.

Variable Production Costs

Expenditures that change in direct correlation with production volumes, like direct labor and raw materials used.

Absorption Costing

An accounting method that includes all direct costs and overhead costs related to the production of a specific product.

Product Costs

Expenses directly attributable to the creation of a product, including material, labor, and overhead costs.