Janet Owns and Operates Her Own Bakery and Coffee Shop

question 15

Multiple Choice

Janet owns and operates her own bakery and coffee shop.Janet has no accounting training and has only three employees.How does she most likely handle the necessary accounting for her business?

• A) She does it herself because it takes little training or knowledge.
• B) She hires a private accountant to work for her and take care of the accounting functions.
• C) She has one of her part-time chefs do the accounting when he has time.
• D) She pays a public accountant to do the accounting for her business.
• E) She does nothing at all,because accounting is not necessary for businesses.

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Definitions:

Unused Capacity

Unused capacity indicates the portion of the production capability that remains idle or is not currently being utilized.

Income Statement

A financial document that reports a company's revenues, expenses, and profits or losses over a specific period.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead costs to products based on a predefined formula, typically involving estimated costs and activity levels.

Machine-Hours

A measure of the hours a machine is operated in the production process, often used as a basis for allocating overhead costs.