The Primary Difference Between Ordinary and Extraordinary Repairs Is That

question 161

Multiple Choice

The primary difference between ordinary and extraordinary repairs is that extraordinary repairs

• A)are an expense of the current period.
• B)are periodic in nature.
• C)are necessary to maintain the asset in good operational condition.
• D)extend the useful life or increase the residual value of the asset.

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Definitions:

Property, Plant, and Equipment

These are long-term assets a company uses in the production of its goods and services, such as buildings, machinery, and vehicles.

Fixed Manufacturing Overhead

The set of production costs that do not change with the level of production, including salaries, rent, and insurance of the factory.

Direct Labor

The labor costs directly attributed to the production of goods, including wages of workers who are actively involved in the manufacturing process.

Raw Material

The basic materials from which a product is made, used in the manufacturing or production process.