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:

Centralization

The concentration of decision-making authority at upper levels of an organizational hierarchy.

Demand Instrument

A financial document or security that requires payment of the specified amount on demand by the holder, without specifying a particular time for repayment.

Bearer Instrument

A negotiable financial instrument that is not registered in anyone's name and can be transferred from one person to another by possession.

Two-party Instrument

A financial document or contract that involves two parties directly, typically involving a payer and a payee.