Which of These Is a Defence of Current Cost Accounting

question 12

Multiple Choice

Which of these is a defence of current cost accounting?

• A)It specifically recognises future technological changes in profit determination.
• B)It is the most objective of the proposed accounting methods.
• C)Relevant current events of the accounting period should be accounted for to maintain the usefulness of accounting information for decision-making.
• D)All of the above are defences.

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Definitions:

Accounting Profit

The difference between a firm's total revenue and its explicit costs, often reported in the financial statements.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, representing the true profitability of a company.

Accounting Profit

The difference between the total revenue received from sales and the total explicit costs of a business.

Explicit Costs

Direct payments made to others in the course of running a business, such as wages, rent, and materials.