Which of the Following Is True of Expense Items Purchased

question 54

Multiple Choice

Which of the following is true of expense items purchased by organizational buyers?

• A) The cost of these products are charged against the income of the company in the year of purchase.
• B) The net income of these products is determined by charging a portion of their cost against the company's annual revenue.
• C) These items are long lived business assets that must be depreciated over time.
• D) All major expenses such as setting up new plants, equipments and machinery are included in this category.

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Definitions:

Overallocated

A situation where resources are disproportionately distributed or excessively committed to a particular project or area, potentially leading to inefficiencies.

Production

Production is the process of creating goods or services through the combination of labor, materials, and technology to meet consumer demand.

Marginal Social Cost

The cost to society of producing one additional unit of a good, including both the cost to the producer and any costs to others from that production.

Marginal Social Benefit

The additional benefit to society resulting from the production or consumption of one more unit of a good or service.