The Accounting Procedures in a Backflush-Costing System Strictly Adhere to Generally

question 125

True/False

The accounting procedures in a backflush-costing system strictly adhere to Generally Accepted Accounting Principles (GAAP).

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Definitions:

Opportunity Costs

The cost of forgoing the next best alternative when making a decision or choice.

Implicit Costs

Indirect, non-out-of-pocket expenses which represent the opportunity costs of using resources owned by the firm for its operations.

Accounting Profit

The difference between total revenue and explicit costs.

Economic Profit

The difference between total revenue and total costs, including explicit and implicit costs.