When Recording Variances in a Standard Cost System

question 71

Multiple Choice

When recording variances in a standard cost system:

• A) Only unfavorable material variances are debited.
• B) Only unfavorable material variances are credited.
• C) Both unfavorable material and labor variances are credited.
• D) All unfavorable variances are debited.
• E) All unfavorable variances are credited.

---

Definitions:

Stock Investment

Purchasing shares of a company's stock to potentially earn dividends or sell at a higher price for profit, considered a form of investing.

Fair Value

An estimated market value of an asset or liability, based on current conditions and willing buyer and seller scenarios.

Insignificant Influence

Refers to a situation where an investor does not have the power to govern the financial and operating policies of an investee, typically resulting in the investment being accounted for using the cost method or fair value method.

Stock Investments

Financial assets representing ownership interest in companies; shareholders may receive dividends and have voting rights.