When Costs Can Be Traced to a Particular Cost Object

question 41

Multiple Choice

When costs can be traced to a particular cost object in an economically feasible way, the cost is a:

• A) direct cost
• B) indirect cost
• C) allocated cost
• D) budgeted cost

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Definitions:

Accrual

The accounting method that records revenues and expenses when they are earned or incurred, regardless of when the cash is actually received or paid.

Prepaid Rent

An asset account that represents rent payments made in advance of the rental period to which they relate.

Normal Balance

Normal Balance refers to the typical or expected balance side (debit or credit) of an account based on double-entry bookkeeping principles.

Financial Statement

Formal records that outline the financial activities and condition of a business, including the balance sheet, income statement, and cash flow statement.