Which of the Following Statements Is True of a Backflush

question 147

Multiple Choice

Which of the following statements is true of a backflush costing system?

• A) All costs are tracked sequentially as products pass through each stage of production.
• B) When inventories are minimal, as in JIT production systems, backflush costing complicates costing systems.
• C) Usage of a backflush costing system does not satisfy the absorption costing rules of GAAP
• D) Backflush costing increases the ability of the accounting system to pinpoint the uses of resources at each step in the production process.

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Definitions:

Hardship Discharge

A release from certain types of obligations or debts due to extreme financial difficulty, often in a bankruptcy context.

Chapters 7

A reference to Chapter 7 of the United States Bankruptcy Code, which provides for the liquidation of a debtor's assets to pay off creditors.

Composition

The agreement in bankruptcy proceedings where a debtor repays a portion of the debt instead of the full amount to creditors.

Creditors

Creditors are individuals or entities to whom money is owed by debtors for goods provided or loans given.