Companies Often Use Multiple Cost-Allocation Bases to Allocate Indirect Costs

question 142

True/False

Companies often use multiple cost-allocation bases to allocate indirect costs because different indirect costs have different cost drivers.

---

Definitions:

Fair Value Method

The Fair Value Method is an accounting strategy used to value certain assets and liabilities at their current market worth, not based on purchase costs or book value.

Unrealized Gains

Profits that have been achieved on paper from an investment but have not yet been realized through a transaction.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, culminating in the net income or loss for the period.

Fixed Assets

Long-term tangible assets used in operations, such as buildings and machinery, not expected to be converted to cash within a year.