Which of the Following Correctly Describes the Accounting for Factory

question 185

Multiple Choice

Which of the following correctly describes the accounting for factory depreciation?

• A) Factory depreciation is a product cost and is expensed as incurred.
• B) Factory depreciation is a period cost and is expensed as incurred.
• C) Factory depreciation is a product cost and is expensed when the manufactured product is sold.
• D) Factory depreciation is a period cost and is expensed when the manufactured product is sold.

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Definitions:

Loanable Funds

The total funds available from savers for borrowing in the financial markets, used for investments, purchasing goods, or other purposes.

Private Investment

Spending by businesses or individuals on capital goods, such as factories, machinery, and homes, which is used to produce goods or services.

Demand For Loanable Funds

The total quantity of loans that borrowers are willing to take out at various interest rates, holding all else equal.

Equilibrium Interest Rate

The interest rate at which the quantity of loanable funds demanded equals the quantity supplied, leading to a balance in the money market.