When Does a Common Cost Occur

question 20

Multiple Choice

When does a common cost occur?

• A)when only one product or service is benefited
• B)when different resources are used to produce one output
• C)when the same resource is used in the output of two or more outputs
• D)when a resource is used by two or more companies

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Definitions:

Budgeting

The process of creating a plan to spend your money, allocating the estimated income towards various categories of expenses.

Financial Statements

Summary reports that convey the financial activities and condition of a business or individual.

Closing Entries

Journal entries made at the end of an accounting period to transfer temporary account balances to permanent accounts.

Contra Asset Account

An account that is used to reduce the balance of a related asset account to reflect its adjusted carrying value.