When a Company Is Determining Their Year End

question 146

Multiple Choice

When a company is determining their year end:

• A) it must be December 31 if they are a retail store.
• B) a calendar year can end at the end of any month.
• C) they may want to adopt a fiscal year that ends at the low point of their operations.
• D) a fiscal year end ends on December 31.

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Definitions:

Period Cost

Expenses that are not directly tied to the production process and are charged to the periods in which they are incurred, such as selling, general, and administrative expenses.

Depreciation

The process of allocating the cost of a tangible asset over its useful life, reflecting the reduction of the asset's value due to usage and age.

Period Cost

Expenses incurred during a specific time period that are not directly tied to production activities.

Fixed Costs

Expenses that do not change with production volume, remaining constant regardless of business activity level.