Assume That Tom Sells a Crate of Ontario Peaches to a Retailer

question 307

Multiple Choice

Assume that Tom sells a crate of Ontario peaches to a retailer in the United States and Susan sells a Canadian bond to a customer in Britain.Which statement illustrates the difference and/or similarity between these two transactions?

• A) Only Tom will actually receive Canadian dollars as a result of this transaction.
• B) The sale of the bond generates a liability,while the sale of the peaches does not.
• C) Both sales generate an asset for Canada.
• D) Both sales generate a liability for Canada.

---

Definitions:

Absorption Costing

An accounting method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a product.

ABC

A method of identifying and assigning costs to specific activities to improve cost accuracy and managerial decision-making.

Special Materials

Materials that are uncommon, difficult to procure, or used in specialized applications.

Activity-Based Costing

An accounting method that assigns costs to products and services based on the resources they consume and the activities they require.