The Cost That Is Avoided When a Company Eliminates a Single

question 26

Multiple Choice

The cost that is avoided when a company eliminates a single item of a product or service is a:

• A) Unit-level cost.
• B) Facility-level cost.
• C) Product-level cost.
• D) Batch-level cost.

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Definitions:

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board.

Accrual

The accounting principle of recording revenues and expenses when they are incurred, regardless of when cash transactions occur.

Contra Asset

A balance sheet account used to reduce the value of related asset accounts to report their net value; examples include accumulated depreciation or allowance for doubtful accounts.

Prepayment

Payments made in advance for goods or services, recorded as an asset on the balance sheet until the corresponding goods or services are received.