Which of the Following Statements Is Not Correct

question 2

Multiple Choice

Which of the following statements is not correct?

• A) Periodic allocations of acquisition cost, made on a systematic and rational basis, are recognized as current expense in conformity with the matching principle.
• B) Amortization accounting is a process of valuation, not of allocation.
• C) At acquisition, tangible, capital assets are recorded at cost on the basis of the cost principle.
• D) Subsequent to acquisition, tangible capital assets that have a limited life are reported at the cost recognized at acquisition less accumulated allocations of such cost.

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Definitions:

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the expected quantity, multiplied by the standard cost per unit.

Variable Overhead Efficiency Variance

The difference between the actual variable overhead incurred and the standard cost allocated for the actual production achieved.

Labor Rate Variance

The difference between the actual cost of direct labor and the expected (or budgeted) cost, based on standard rates and actual hours worked.

Materials Price Variance

The difference between the actual cost of materials purchased and the expected (or standard) cost, used to assess cost management performance in procurement.