Which of the Following Statements Is True About the Step-Down

question 140

Multiple Choice

Which of the following statements is true about the step-down method?

• A) it partially recognizes the services provided among support departments
• B) it does not recognize the total services that support departments provide to each other
• C) it is conceptually the most precise method
• D) it results in allocating only the support costs used by operating departments

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Definitions:

Share Capital

The total amount of funds raised by a company through the issuance of shares to shareholders, representing ownership in the company.

Retained Earnings

The portion of a company's profit that is kept or retained within the company, not distributed to shareholders as dividends.

Market Value

The present cost at which a service or asset is available for purchase or sale in the market.

Stock Dividend

A dividend payment made in the form of additional shares rather than cash, increasing the total number of shares owned by shareholders.