A "Standard Cost" Is a Predetermined Amount (E

question 135

Multiple Choice

A "standard cost" is a predetermined amount (e.g., cost) that:

• A) Should be incurred under relatively efficient operating conditions.
• B) Will be incurred for an operation or a specific objective.
• C) Must occur for an operation or a specific objective.
• D) Cannot be changed once it is established by management.
• E) Is useful for planning and control, but not for inventory valuation purposes.

---

Definitions:

Bank Reconciliation

The method of aligning the balance in a company's financial records for a cash account with the relevant details on a bank statement.

Deposits in Transit

Funds that have been received and recorded by a business but not yet processed or acknowledged by the bank.

Allowance Method

An accounting technique used to estimate and account for bad debts where the company anticipates a certain percentage of accounts receivable will be uncollectible.