Generally, the Order of Cost, from the Least Expensive to the Most

question 70

Multiple Choice

Generally, the order of cost, from the least expensive to the most expensive, for long-term capital of a corporation is ________.

• A) new common stock, retained earnings, preferred stock, long-term debt
• B) common stock, preferred stock, long-term debt, short-term debt
• C) preferred stock, new common stocks, common stock, retained earnings
• D) long-term debt, preferred stock, retained earnings, new common stock

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Definitions:

Costing System

A method used by businesses to estimate the cost of their products for profitability analysis, cost control, and inventory valuation.

Weighted Average Method

A costing method that calculates the cost of inventory based on the weighted average of the cost of items available for sale, used in accounting.

FIFO Method

"First In, First Out," an inventory valuation method where the oldest inventory items are sold first.

Abnormal Spoilage

Wastage that occurs outside of the normal production process, often due to unusual or unforeseen circumstances.