As Compared to Natural Accounts, FUNCTIONAL ACCOUNTS

question 36

Multiple Choice

As compared to natural accounts, FUNCTIONAL ACCOUNTS:

• A) are the accounts to which various costs are charged in the normal accounting cycle.
• B) show the purpose for which expenditures are made.
• C) include items such as storing, salaries, and taxes.
• D) All of these.
• E) Both are the accounts to which various costs are charged in the normal accounting cycle; and include items such as storing, salaries, and taxes.

---

Definitions:

Patent Amortization

The process of expensing the cost of a patent over its useful life, reflecting the consumption of the patent's value over time.

Depreciable Asset

A tangible asset that is subject to depreciation, reflecting its loss in value over time due to wear and tear, or obsolescence.

Indirect Method

A way of preparing a cash flow statement where net income is adjusted for non-cash transactions, deferrals, and accruals to calculate cash from operating activities.

Gain On Sale

The profit realized from the sale of an asset when the selling price exceeds its book value.