A Factor Having a "Cause-And-Effect" Relationship with a Cost Object

question 58

Multiple Choice

A factor having a "cause-and-effect" relationship with a cost object is called a(n) :

• A) cost driver.
• B) allocation base.
• C) direct cost.
• D) indirect cost.

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Definitions:

Partial Income Statement

A financial document that reports a company's revenues, expenses, and profits over a portion of the fiscal year, rather than the entire year.

Working Capital

The measure of a company's operational liquidity, calculated as current assets minus current liabilities.

Current Assets

Assets that are expected to be converted into cash or used up within one year or the operating cycle, whichever is longer.

Current Liabilities

Short-term financial obligations that are due within one year from the balance sheet date or within the entity's normal operating cycle if longer.