Identify and Explain the Five Fundamental Principles That Form the Basis

question 87

Essay

Identify and explain the five fundamental principles that form the basis of accounting standards in United States.

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Definitions:

Direct Labor Cost

The cost of wages, benefits, and payroll taxes for employees who are directly involved in the production of goods.

Predetermined Overhead Rate

A rate calculated before the accounting period begins, used to allocate manufacturing overhead costs to individual units of production.

Actual Overhead

The actual costs incurred for indirect materials, indirect labor, and other expenses that cannot be directly traced to products or services.

Direct Labor Cost

The total cost of all the labor directly involved in the production of goods or services, not including indirect expenses like administration.