ABC Systems Are Similar to Traditional Costing Systems in the Way

question 4

Multiple Choice

ABC systems are similar to traditional costing systems in the way they:

• A) Allocate direct costs to cost objects
• B) Define cost allocation bases
• C) Trace direct costs to cost objects
• D) Trace indirect costs to activities

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Definitions:

Accounts Receivable

Company receivables originating from goods or services offered to customers who haven't yet completed payment.

Accounts Payable

Funds that a company is required to pay to its suppliers for products or services received but for which payment has not yet been made.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year, by comparing its current assets to its current liabilities.

Net Working Capital Turnover

A measure of how effectively a company is using its working capital (current assets minus current liabilities) to generate sales.