To Guide Cost Allocation Decisions, the Benefits-Received Criterion ________

question 152

Multiple Choice

To guide cost allocation decisions, the benefits-received criterion ________.

• A) generally uses the cost driver as the cost allocation base
• B) advocates allocating costs in proportion to the cost object's ability to bear costs allocated to it
• C) is the primarily used criterion in activity-based costing
• D) may use an allocation base of division revenues to allocate advertising costs

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Definitions:

S Corporation

A specific kind of corporation in the U.S. that conforms to certain Internal Revenue Code criteria, which permits it to distribute income directly to its shareholders, thereby bypassing the double taxation issue.

Double Taxation

The imposition of two or more taxes on the same income, asset, or financial transaction, often seen in international business where income is taxed in both the source and the resident country.

Secured Bond

A bond backed by collateral to decrease the risk of default.

Due Process

A fundamental legal principle that ensures fair treatments and procedures are followed by the government before depriving a person of life, liberty, or property.