What Are the Effects on the Accounting Equation from the Purchase

question 107

Multiple Choice

What are the effects on the accounting equation from the purchase of a short-term investment?

• A)Assets and stockholders' equity increase.
• B)No effects; assets increase and decrease by the same amount.
• C)Assets and liabilities decrease.
• D)Stockholders' equity increases and liabilities decrease.

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Definitions:

Activity-Based Costing

An accounting method that identifies the activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption by each.

Activity-Based Costing

A pricing strategy that pinpoints various tasks within a company and allocates the expense of each task across all goods and services based on their real usage.

Batches

Groups of items or materials processed or produced together in a manufacturing or production process.

Activity-Based Costing

A costing method that assigns overhead and indirect costs to related products and services based on their usage of the resources.