The Main Difference Between Activity-Based Costing and Traditional Costing Systems

question 165

True/False

The main difference between activity-based costing and traditional costing systems is that activity-based costing uses a separate allocation base for each activity.

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Definitions:

Present Value

The current worth of a future sum of money or cash flows given a specified rate of return.

Dollar Received

Indicates the actual amount of money received, taking into account all transactions.

Potential Profit Rate

refers to the expected return on investment or the rate at which a particular activity or venture might yield profit under optimal conditions.

Usury Laws

Regulations that impose caps on the interest rates that can be charged on loans, designed to protect consumers from excessive rates.