Which of the Following Was Required by SFAS No

question 10

Multiple Choice

Which of the following was required by SFAS No. 33 as the basis of primary financial statements?

• A) Historical cost
• B) Current cost
• C) Present value of future cash flows
• D) Net realizable value

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Definitions:

Variable Costing

A costing method that includes only variable manufacturing costs—direct materials, direct labor, and variable manufacturing overhead—in the cost of a unit of product.

Absorption Costing

A costing method that includes all manufacturing costs—direct materials, direct labor, and both variable and fixed manufacturing overhead—in the cost of a unit of product.

Inventory

Items held for sale in the ordinary course of business, as well as supplies and materials used in producing goods for sale.

Gross Profit

The profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services.