Which of the Following Statements Is True of the Methods

question 109

Multiple Choice

Which of the following statements is true of the methods for allocating joint costs?

• A) Under the cause-and-effect criterion, the physical-measure method is highly desirable.
• B) Byproducts are never excluded from the denominator used in the physical-measure method.
• C) The NRV method is never used when the selling prices of joint products vary frequently.
• D) The sales value at split-off method follows the benefits-received criterion of cost allocation.

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Definitions:

Supporting Service Expenses

Costs incurred by a business or organization for activities that aid the operation but do not directly contribute to the main business activity.

Not-for-Profit Entity

An organization that operates for charitable, educational, cultural, religious, or other purposes serving the public interest, where profitability is not the primary goal.

Supporting Services Expenses

Costs incurred for activities that assist the core operations of a business but do not directly contribute to production.

Journal Entry

A recording in the accounting ledger that represents a single transaction and its effect on the accounts, consisting of at least one debit and one credit.