Which of the Following Statements Is True

question 164

Multiple Choice

Which of the following statements is true?

• A) There is a cause-and-effect relationship between the cost driver and the amount of cost.
• B) Fixed costs have cost drivers over the short run.
• C) Over the short run all costs have cost drivers.
• D) Volume of production is a cost driver of distribution costs.

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Definitions:

Intra-Entity Transfer

Transactions of goods, services, or funds that occur between departments or divisions within the same company or organization.

Consolidation

The process of combining financial statements of a parent company with its subsidiaries to present as if the group of companies is a single economic entity.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded for a long-term asset since its acquisition.

Consolidation Purposes

The process of combining the financial statements of a parent company and its subsidiaries into one comprehensive financial statement package, to present as if the group were a single entity.