Which of the Following Is Characteristic of Indirect Costs

question 187

Multiple Choice

Which of the following is characteristic of indirect costs?

• A)Indirect costs can be easily and accurately traced to a cost object.
• B)Indirect costs are shared between or among more than one cost object.
• C)Indirect costs should always be assigned to a cost object.
• D)Indirect costs include all labour.

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Definitions:

Disbursement Basis

An accounting method in which expenditures and revenues are recorded when cash is actually disbursed or received, rather than when they are incurred.

Accrual Basis

An accounting method where income and expenses are recorded when they are earned or incurred, regardless of when the cash transaction happens.

GAAP Constraint

Guidelines that restrict or limit certain accounting practices under Generally Accepted Accounting Principles, to ensure fairness, consistency, and accuracy in financial reporting.

Disbursement Basis

Accounting method where expenses are recorded when cash is paid out, rather than when incurred.