The Greatest Virtue of the Direct Method Is

question 106

Multiple Choice

The greatest virtue of the direct method is

• A) its simplicity.
• B) the lack of understandability by managers.
• C) the recognition of reciprocal relationships between service departments.
• D) its ability to allocate production department costs to service departments.

Learn the accounting treatments for disposal of assets, including calculations of gain or loss.

Grasp the concept and treatment of Modified Accelerated Cost Recovery System (MACRS) for tax purposes.

Understand accounting for intangible assets and the specifics of their impairment and amortization.

Learn accounting for natural resources and the depletion method.

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Definitions:

Operating Income

Earnings from a company's core business operations, excluding income from investments and after operational expenses have been deducted.

Support Department Allocations

The process of distributing the costs of support departments (such as HR and IT) to producing departments based on predetermined criteria.

Operating Income Before

An earnings before interest and taxes measure that evaluates a company's profit from operations before the impact of financing and tax expenses.

Operating Income Before

Income derived from regular business operations before deductions such as interest and taxes.