The Use of Either Absorption or Variable Costing Will Make

question 46

Multiple Choice

The use of either absorption or variable costing will make little difference in companies

• A)using just-in-time inventory methods.
• B)with large inventories.
• C)with high fixed costs.
• D)with high variable costs.

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Definitions:

Accumulated Depreciation

The total amount of a company's asset value that has been allocated as depreciation expense since the asset was put into use.

Closing Entries

Journal entries made at the end of an accounting period to transfer temporary account balances to permanent accounts, thus preparing the books for the next period.

Income Summary

An account used in the closing process that summarizes revenues and expenses for a period, transferring the net amount to retained earnings.

Sales Returns

Transactions where customers return defective, unsatisfactory or unwanted products back to the seller, resulting in a reversal of revenue.