Which of the Following Statements Is True of the Production

question 21

Multiple Choice

Which of the following statements is true of the production method of accounting for byproducts?

• A) It makes no journal entries until the byproduct is sold.
• B) It is the preferred method because of the matching principle.
• C) It records revenues of the byproduct in the income statement as revenue.
• D) It adds revenues of the byproduct to the cost of goods sold in the income statement.

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Definitions:

Shares

Shares represent units of ownership interest in a corporation or financial asset, providing an equal distribution in any profits, if any are declared, in the form of dividends.

Maintenance Margin

The minimum amount of equity that must be maintained in a margin account to avoid a margin call.

Short 100 Shares

The process of selling 100 shares that are not currently owned, with the expectation of buying them back at a lower price for a profit.

Initial Margin

The minimum amount of funds required to open a position in the futures market, intended to cover potential losses.