Which of the Following Statements Is True Regarding Estimated Closure

question 78

Multiple Choice

Which of the following statements is true regarding estimated closure costs for municipal solid waste landfills,assuming that it is operating as an enterprise fund?

• A) The estimated closure costs are expensed fully at the time of the estimate.
• B) A portion of those future estimated costs is to be charged as an expense and a liability recorded based on a units-of-production method.
• C) Modified accrual principles apply and the amount expensed is limited to amounts expected to be paid during the year and within 60 days of year end.
• D) None of the above is true.

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Definitions:

Rent Expense

The cost incurred by a business to utilize property as an office, manufacturing space, storage, or retail location.

Prepaid Rent Expense

An asset account that shows the amount of rent paid in advance, which has not yet been consumed or used.

Freight-In

The cost associated with transporting goods into a facility, usually included in the inventory cost of the goods purchased.

Periodic Method

An accounting inventory system where updates to the inventory records are made periodically at the end of an accounting period.