Under New Accounting Standards Passed in 2006 Firms Must Report

question 52

Multiple Choice

Under new accounting standards passed in 2006 firms must report changes in accounting principle in the current and prior years as if the new accounting principle had been applied all along.The rationale for this change was:

• A) using the same accounting principle in current and prior periods enhances the information content of reported earnings in forecasting future earnings.
• B) conservatism.
• C) comparability.
• D) materiality.

Learn how to record transactions in a standard costing system accurately.

Gain the ability to compute variances between actual costs and standard costs, including direct materials, direct labor, and fixed overhead variances.

Understand how to apply fixed overhead to Work in Process (WIP) inventory using the predetermined overhead rate.

Know how to prepare and analyze an income statement for manufacturing companies using standard costing.

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Definitions:

Verification

The process of ensuring the accuracy and validity of data or documents.

Bank Reconciliation

A process that explains the difference between the bank balance shown in a company's bank statement and its financial records.

NSF Check

A check that cannot be processed due to insufficient funds in the account it is drawn on, commonly known as a bounced check.

Outstanding Checks

Checks that have been written and recorded in financial accounts but have not yet been cashed or cleared by the bank.