Some Liabilities Must Be Estimated So That They Can Be

question 105

Multiple Choice

Some liabilities must be estimated so that they can be recorded in the same period as the related revenues.What is violated if these amounts are not recorded in the same period as the related revenues?

• A) concept of historical cost
• B) going concern assumption
• C) limitation of materiality
• D) matching principle

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Definitions:

Factory Overhead

This term refers to the indirect manufacturing costs that cannot be directly tied to specific units of production, such as maintenance, utilities, and management salaries.

Direct Materials

Raw materials that can be directly attributed to the production of a product.

Cotton

A natural fiber and a key agricultural commodity used primarily in the textile industry for making fabrics.

Internal Auditing

The independent, objective assurance and consulting activity designed to add value and improve an organization's operations, focusing on internal controls and business processes.