Favorable Variances Are Contra Expenses and Therefore Decrease Cost of Goods

question 145

True/False

Favorable variances are contra expenses and therefore decrease Cost of Goods Sold.

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Definitions:

Equity Method

An accounting technique used to assess the profits earned by a company through its investment in another company, by reporting the income based on the investee's net income and changes in equity.

Eliminate Unrecognized

A process in accounting to remove unrealized gains or losses from the books, often in the context of consolidation accounting to avoid double counting.

Intra-entity Gross Profit

The profit realized from transactions conducted within different divisions or segments of the same company, often eliminated in consolidated reporting.

Eliminate Intra-entity Transfer

The process of removing transactions between entities within a single organization from the consolidated financial statements to prevent double counting.