The Accounting Principle That Requires Important Noncash Financing and Investing

question 167

Multiple Choice

The accounting principle that requires important noncash financing and investing activities be reported on the statement of cash flows or in a footnote is the:

• A) Historical cost principle.
• B) Materiality principle.
• C) Full disclosure principle.
• D) Going concern principle.
• E) Business entity principle.

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Definitions:

Overhead Applied

The allocation of estimated overhead costs to specific jobs or departments based on a predetermined rate or method.

Departments

Divisions within an organization, each responsible for specific functions or tasks, contributing to the organization's overall objectives.

Customizing Department

A specialized unit within a company that modifies products to meet specific customer requirements or preferences.

Departmental Predetermined Overhead Rates

Overhead rates calculated for each department based on estimated costs and activity levels, used to allocate overhead costs to products.