Which of the Following Is the Appropriate Basis of Accounting

question 39

Multiple Choice

Which of the following is the appropriate basis of accounting for an agency fund?

• A) Cash basis.
• B) Modified cash basis.
• C) Accrual basis.
• D) Modified accrual basis.

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Definitions:

Absorption Costing

A costing approach that encompasses all expenses related to production, including direct materials, direct labor, and all manufacturing overheads, both variable and fixed, as part of a product's cost.

Selling and Administrative Expenses

Expenses related to the selling of products and the management of the business, not directly tied to production.

Net Income

The total profit of a company after subtracting all expenses from revenue, including taxes and costs.

Units Sold

The total number of product units that have been sold during a particular time period.