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

question 40

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 AASB 102.
• 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 AASB 102.
• C) Absorption costing treats fixed production costs as an expense of the period and is the required method for valuing inventories under AASB 102.
• 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 AASB 102.

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Definitions:

Dividend Policy

Dividend policy is a company's strategy or guidelines designed to decide the amount to be paid out to shareholders in the form of dividends.

Dividend Payment

The distribution of a portion of a company's earnings to its shareholders, usually in the form of cash or additional stock.

Declaration Date

The date on which a firm’s directors issue a statement declaring a dividend.

Ex-Dividend Date

The date when the right to the dividend leaves the stock. This date was established by stockbrokers to avoid confusion and is two business days prior to the holder-of-record date. If the stock sale is made prior to the ex-dividend date, the dividend is paid to the buyer. If the stock is bought on or after the ex-dividend date, the dividend is paid to the seller.