The Accounting for Employee Stock Options Involves the Firm Debiting

question 146

Multiple Choice

The accounting for employee stock options involves the firm debiting _____ and crediting _____ for the amortized amount of the fair value of the stock options on the date of the grant over the requisite service period.

• A)Compensation Expense; Additional Paid-In Capital (Stock Options)
• B)Stock Option Expense; Additional Paid-In Capital (Stock Options)
• C)Stock Option Expense; Retained Earnings
• D)Compensation Expense; Retained Earnings
• E)Compensation Expense; Common Stock

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Definitions:

Activity Rates

Used in activity-based costing, these rates are applied to specific activities to allocate costs accurately to products or services based on their consumption of those activities.

Traditional Costing Method

A costing methodology that allocates factory overhead to products based on the volume of production resources they consume.

Activity-Based Costing

Activity-based costing is an accounting method that assigns costs to products or services based on the activities and resources that go into producing them.

Direct Labor-Hours

A quantification of the overall hours dedicated to the direct production of goods.