Reports in the Financial Press That a Particular Company Reported

question 58

Multiple Choice

Reports in the financial press that a particular company reported healthy profits despite increased wage costs are indicative of:

• A) The negative impact of reporting payments to employees as expenses while payments to owners are treated as distributions of profits.
• B) The implied emphasis on the returns to owners being good and returns to other stakeholders such as employees as being bad.
• C) The effect of reporting employees as expenses and not reporting the social costs of unemployment on decisions to restructure companies to reduce the work force.
• D) The way accounting reflects and helps to re-create widely held views about the roles of various stakeholders in the entity.
• E) All of the given answers.

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Definitions:

Activity Rate

A metric used to allocate costs to cost objects based on the activities that drive costs, often used in activity-based costing.

Estimated Costs

Projected or forecasted costs associated with manufacturing, projects, or operations, used for budgeting and planning purposes.

Activity-Based Costing

A costing method that allocates overhead costs to specific products or activities based on their consumption of resources.

Estimated Overhead Cost

The projected cost of indirect production expenses for a specific period.