Which of the Following Statements Is True of Lean Accounting

question 92

Multiple Choice

Which of the following statements is true of lean accounting?

• A) It is much complex than traditional product costing but produces more accurate product unit costs.
• B) It does not always compute costs for individual products but does emphasize product costs by value stream.
• C) It omits recording some of the journal entries relating to the stages from the purchase of direct materials to the sale of finished goods.
• D) It is acceptable under GAAP.

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Definitions:

Moral Hazard

Moral hazard occurs when there is a lack of incentive to guard against risk where one is protected from its consequences, often after entering into a contract or agreement.

Deductible

The amount paid out of pocket by the policyholder before an insurance company covers a claim.

Full Replacement Value

An insurance term referring to the amount necessary to replace damaged or lost property with new items of like kind and quality without deducting for depreciation.

Moral Hazard

A situation where one party in a transaction has the opportunity to take risks because they know they will not have to bear all the consequences.