Which of the Following Would Not Be Considered a Cost

question 21

Multiple Choice

Which of the following would not be considered a cost of financial distress?

• A) Lack of interest tax shields
• B) Bankruptcy costs
• C) Excessive risk-taking by shareholders
• D) Loss of customers or suppliers

---

Definitions:

T Accounts

A bookkeeping tool used to visualize and simplify the recording of transactions in debit and credit format.

Underapplied Overhead

A situation where the allocated manufacturing overhead costs are less than the actual overhead costs.

Direct Materials

Raw materials that are directly traceable to the production of specific goods or services and are significant in terms of cost.

Manufacturing Overhead

Refers to all the indirect costs associated with manufacturing, not directly tied to a specific product, such as factory rent or maintenance.