The Gathering of Related Revenues and Expenses into the Same

question 70

Multiple Choice

The gathering of related revenues and expenses into the same period,regardless of when they were incurred,is:

• A) cash-basis accounting.
• B) market-value accounting.
• C) book-value accounting.
• D) accrual accounting.

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Definitions:

Cost of Goods Sold

The total expense directly associated with producing or purchasing goods that have been sold.

Period Cost

Costs that are expensed in the period they are incurred and are not directly tied to the production of goods.

Product Cost

The total cost to produce a product, including direct labor, materials, and manufacturing overhead.

Prime Cost

The direct costs of manufacturing an item, which include direct materials and direct labor costs, but exclude overhead costs.