The Determination of a Cost as Being Either Direct or Indirect

question 94

Multiple Choice

The determination of a cost as being either direct or indirect depends upon

• A)the accounting system.
• B)the allocation system.
• C)the cost tracing system.
• D)only the cost object chosen to determine its individual costs.
• E)the choice of the cost object, and the materiality of the cost in question.

---

Definitions:

Contract Rate

The interest rate stipulated in a contract or agreement, often related to loans, bonds, or other financial instruments.

Market Rate

The prevailing price or interest level determined by the supply and demand dynamics in a competitive marketplace.

Journal Entry

A record of a financial transaction in the accounting system that includes the date, accounts affected, amounts, and description of the transaction.

Callable Bonds

Bonds that can be redeemed by the issuer before their maturity date at a specified price, usually at a premium to the face value.