The Costs of Operating a Purchasing Department Are Necessary to the Purchasing

question 57

True/False

The costs of operating a purchasing department are necessary to the purchasing of inventory therefore those costs incurred should be allocated to inventory.

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Definitions:

Parent

A company that controls or owns more than half of another company's stock, thereby having control over its subsidiary.

Subsidiary

A company controlled by another company, referred to as the parent company, through ownership of more than half of its voting stock.

Impairment

The reduction in the recoverable value of a fixed asset or goodwill below its book value on the balance sheet, often leading to an expense in the income statement.

Retained Earnings

Accumulated net income that has been retained by a company rather than distributed to its owners as dividends.