Which of the Following Statements Is True

question 45

Multiple Choice

Which of the following statements is true?

• A)The deferral method of accounting generally results in a lower level of revenue than the restricted fund method.
• B)The deferral method of accounting generally results in a higher level of revenue than the restricted fund method.
• C)The deferral method of accounting generally results in a higher level of revenue than the restricted fund method only if capital asset amortization is involved.
• D)The deferral method of accounting results in the same amount of revenue as the restricted fund method.

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Definitions:

Applied Overhead

This refers to the amount of overhead cost assigned to a particular cost object, like a product or project, based on a predetermined rate or formula.

Actual Overhead

The actual indirect costs incurred for operations, including costs associated with manufacturing overhead not directly tied to a specific product or service.

Process Cost System

This accounting method is used for homogenous products and services to assign production costs evenly across all units produced, facilitating per unit cost analysis.

Job Order Cost System

An accounting system used to assign costs to individual jobs or batches, tracking the expenses associated with specific customer orders or projects.