Which of the Following Correctly Describes the Accounting for Administrative

question 137

Multiple Choice

Which of the following correctly describes the accounting for administrative expenses of a manufacturing company?

• A) Administrative expenses are product costs and are expensed as incurred.
• B) Administrative expenses are period costs and are expensed as incurred.
• C) Administrative expenses are product costs and are expensed when the manufactured product is sold.
• D) Administrative expenses are period costs and are expensed when the manufactured product is sold.

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Definitions:

Psychological Dependency

A mental reliance on a substance, activity, or behavior that can lead to emotional distress or difficulty in functioning without it.

Shrinkage

the reduction in inventory due to factors such as theft, damage, or administrative errors, not sales.

Inventory Losses

The reduction in inventory due to factors such as theft, damage, or obsolescence, resulting in financial loss for a business.

Shoplifting

The unauthorized removal of goods from a retail establishment without payment, considered a form of theft.