Consider the Following Statements About Budgeting and a Product's Life

question 12

Multiple Choice

Consider the following statements about budgeting and a product's life cycle:
I.Budgets should focus on costs that are incurred only after a product has been introduced to the marketplace.
II.Life-cycle costs would include those related to product planning,preliminary design,detailed design and testing,production,and distribution and customer service.
III.When a life cycle is short,companies must make certain that before a commitment is made to a product,the product's life-cycle costs are covered.
Which of the above statements is (are) true?

• A)I only.
• B)II only.
• C)I and II.
• D)II and III.
• E)I,II,and III.

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Definitions:

Permanent Account

A permanent account is an account that is not closed at the end of the accounting period and carries its balance over into the next period, such as assets, liabilities, and equity accounts.

Closing Entries

Entries recorded at the close of an accounting period for the purpose of moving balances from temporary to permanent accounts.

Capital Account

An account showing the net worth of a business at a specific point in time, including assets contributed by owners and profits.

Balance Sheet

A financial statement that displays a company's assets, liabilities, and equity at a specific point in time.