The Cost Principle Relates Most Closely to the

question 112

Multiple Choice

The cost principle relates most closely to the

• A)recognition point.
• B)recognition issue.
• C)valuation issue.
• D)classification issue.

---

Definitions:

High-low Method

An accounting technique used to estimate the variable and fixed components of a company's costs, based on the highest and lowest levels of activity.

Fixed Costs

Expenses that do not change in total regardless of the level of production or sales activity.

Variable Costs

Expenses that vary directly with changes in production or sales volumes, such as raw materials and direct labor costs.

Production Increases

A rise in the amount of goods and services produced over a given period of time by a business or economy.