Which of the Following Statements Is Correct in Relation to the Costing

question 17

Multiple Choice

Which of the following statements is correct in relation to the costing of inventories?

• A)Direct costing treats fixed production costs as an expense of the period and is not permitted as a method for valuing inventories under IAS 2.
• B)Absorption costing treats fixed production costs as a product cost, allocating them to the goods produced, and is not permitted as a method for valuing inventories under IAS 2.
• C)Absorption costing treats fixed production costs as an expense of the period and is the required method for valuing inventories under IAS 2.
• D)Direct costing treats fixed production costs as a product cost, allocating them to the goods produced, and is not permitted as a method of valuing inventory under IAS 2.

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Definitions:

Title

The ownership of the goods.

Construction Lien

A legal claim against a property by a contractor or subcontractor who has not been paid for work performed or materials supplied in improving that property.

Building Contract

A legal agreement between a property owner and a contractor outlining the construction or renovation of a building, including terms like scope of work, payment, and timelines.

Registration Of The Lien

The official recording of a lien, which is a legal right or interest that a lender has in the borrower's property, until a debt is paid off.