Which of the Following Is True of Refinement of a Costing

question 134

Multiple Choice

Which of the following is true of refinement of a costing system?

• A) While refining a costing system, companies should identify as many indirect costs as is economically feasible.
• B) A homogeneous cost pool will use multiple cost drivers to allocate costs.
• C) It reduces the use of broad averages for assigning the cost of resources to cost objects.
• D) It is likely to yield the most decision-making benefits when direct costs are a high percentage of total costs.

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Definitions:

Accounts Receivable

The money owed to a company by its customers for goods or services that have been delivered but not yet paid for.

Permanent Account

An account in the general ledger that carries its ending balance over to the next accounting period, such as assets, liabilities, and equity accounts.

Balance Sheet Accounts

Accounts that appear on the balance sheet, representing the company's assets, liabilities, and shareholders' equity at a specific point in time.

Mortgage Payable

A liability account that records the amount owed on a long-term property loan.