Opportunity Costs of Spoilage Should Be

question 128

Multiple Choice

Opportunity costs of spoilage should be:

• A) Charged to an individual job
• B) Charged to a separate loss account
• C) Considered, but not recorded
• D) Recorded at the time of production

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Definitions:

Rent Expense

The cost incurred by a business to utilize property or equipment for operations, which is recorded as an expense on the income statement.

Depreciation Expense

The portion of the cost of a fixed asset that is recorded as an expense each year of its useful life.

Working Capital

Current assets minus current liabilities, indicating the liquidity available to a business for day-to-day operations.

Closing Entry

An accounting transaction recorded at the end of an accounting period to transfer the balances of temporary accounts to permanent ones.