Which of the Following Illustrates a Purpose for Allocating Costs

question 178

Multiple Choice

Which of the following illustrates a purpose for allocating costs to cost objects?

• A)To provide information to customers
• B)To measure liabilities
• C)To determine a selling price the market will bear
• D)To motivate managers and employees

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Definitions:

Legal Capital

The minimum amount of capital that a company is required to maintain for the protection of its creditors.

Stockholders

Individuals or entities that own shares in a corporation, giving them various rights including a claim on part of the company's profits in the form of dividends.

Capital Paid

The total amount of money that investors have contributed to a corporation by purchasing shares of stock, also known as paid-in capital.

Retained Earnings

The portion of a company's profits that is kept or retained rather than paid out as dividends to shareholders.