The Main Difference Between Activity-Based Costing and Traditional Costing Systems

question 165

True/False

The main difference between activity-based costing and traditional costing systems is that activity-based costing uses a separate allocation base for each activity.

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Definitions:

Net Assets

The difference between total assets and total liabilities, representing the owner's or shareholders' equity in a company.

Cost

The amount of money required to purchase something or the expense associated with creating a product or service.

Selling Price

The amount of money for which a product is sold to the consumer.

Completed-Contract Method

An accounting strategy where revenue and expenses of a long-term project are deferred until the project is completed, at which point they are recognized in the fiscal period of completion.