Which of the Following Five Steps (Out of Six) of Cost

question 16

Multiple Choice

Which of the following five steps (out of six) of cost estimation is out of order?

• A) Step 1: Define the cost object to be estimated.
• B) Step 2: Determine the cost driver(s).
• C) Step 3: Collect relevant data on the cost of the cost object and the cost driver.
• D) Step 4: Evaluate the accuracy of the cost estimate.
• E) Step 5: Select and employ the estimation method.

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Definitions:

Current Liability

Obligations that a company needs to settle within one fiscal year or its current operating cycle, whichever is longer, often including accounts payable, short-term loans, and accrued expenses.

Accounts Payable

Amounts a company owes to creditors for items or services purchased on credit.

Mortgage Payable

A liability represented by a legal agreement granting a lender a lien on real estate property as security for the repayment of a loan.

Provisions

Liabilities of uncertain timing or amount, recognized on the financial statements for expected losses or expenses.