The Conversion Process Involves Three Common Resources: Material, Direct Labor

question 45

Multiple Choice

The conversion process involves three common resources: material, direct labor and overhead.Which of the following is an example of overhead in that context?

• A)Depreciation on factory equipment
• B)Chief financial officer's salary
• C)Both depreciation on factory equipment and chief financial officer's salary
• D)Neither depreciation on factory equipment nor chief financial officer's salary

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Definitions:

Accounting Period

A specific duration of time for which financial statements are prepared, often annually or quarterly.

Accumulated Depreciation

The cumulative depreciation expense recorded for an asset from the time it was first utilized.

Artificial Time Periods

A concept in accounting referring to arbitrary time intervals chosen for the purpose of financial reporting, such as quarters or fiscal years.

Cash Basis Accounting

An accounting method where revenues and expenses are recognized when cash is received or paid, rather than when earned or incurred.