How Do We Allocate Statistical Discrepancy Among the Current,capital,and Financial

question 24

Multiple Choice

How do we allocate statistical discrepancy among the current,capital,and financial accounts?

• A) We have no way of knowing exactly how to allocate this discrepancy.
• B) Depend on the degree of certainty by which we attribute to these accounts.
• C) Divide it evenly amongst the three accounts.
• D) Depend on the convention adopted by the specific financial institution.
• E) Statistical discrepancy signals human errors made when dealing with financial accounts.

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Definitions:

Lower of Cost

An accounting principle that values inventory at the lower of its historical cost or the current market value.

Net Realizable Value

The estimated selling price in the ordinary course of business, less any costs of completion, disposal, and transportation.

Cost of Goods Sold

The immediate expenses related to manufacturing the products a company sells, which consist of materials and labor.

Inventory

The tangible property held for sale in the normal course of business, or to be used in producing goods or services.