Which of the Following Statements Is True Regarding Estimated Closure

question 56

Multiple Choice

Which of the following statements is true regarding estimated closure costs for municipal solid waste landfills, assuming that it is operating as an enterprise fund?

• A) A portion of those future estimated costs is to be charged as an expense and a liability recorded based on a units-of-production method.
• B) Modified accrual principles apply and the amount expensed is limited to amounts expected to be paid during the year and within 60 days of year end.
• C) The estimated closure costs are expensed fully at the time of the estimate.
• D) None of the above is true.

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Definitions:

Transferred Units

Refers to items or inventory that have been moved from one location, department, or stage of processing to another within a company.

Equivalent Units

A concept used in process costing that converts partially completed units into a number of equivalent fully completed units.

Ending Work

The inventory or work-in-process at the end of an accounting period that has not yet been completed.

Equivalent Units

A concept used in cost accounting to standardize the quantities of produced goods, accounting for partially completed units.