For Companies in Which Full Allocation Is Not Followed,corporate Sustaining

question 49

Multiple Choice

For companies in which full allocation is not followed,corporate sustaining costs are ________.

• A) allocated to divisions using cause-and-effect relationship
• B) allocated to customers using cause-and-effect relationship
• C) added to aggregate operating incomes of the divisions
• D) subtracted as a lump-sum amount after aggregating operating incomes of the divisions

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Definitions:

Capital Account Balances

The amounts recorded in the equity section of the balance sheet, representing owners' contributions and retained earnings in a business.

Liquidation

The process of winding down a company by selling off its assets to pay creditors and distribute any remaining assets to shareholders.

Net Pay

Gross pay less payroll deductions; the amount the employer is obligated to pay the employee.

Payroll Taxes

Taxes that employers are required to withhold from employees' paychecks and/or pay on behalf of their employees, including Social Security and Medicare taxes.