A Deferral Adjustment May Involve One Asset and One Expense

question 163

True/False

A deferral adjustment may involve one asset and one expense account.

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Definitions:

Conversion Costs

Costs incurred during the transformation of raw materials into finished goods, including both direct labor costs and manufacturing overhead.

Equivalent Unit

A computation used in process costing that converts partially completed units of production into a number of fully completed units.

Process Costing

A costing method used for homogenous products, which assigns costs to units of product based on the process they go through.

Equivalent Unit

A measure used in accounting to express the amount of work done by employees or the amount of goods produced in terms of fully completed units.