If Ending Variance Account Balances Are Immaterial, They Can Be

question 36

True/False

If ending variance account balances are immaterial, they can be closed directly to Cost of Goods Sold.

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Definitions:

Equity Method

An accounting technique used when a company invests in another company and has significant influence, typically reflected by owning 20% to 50% of the voting stock, whereby the investment is initially recorded at cost and subsequently adjusted for the investing company's share of the investee's net profits or losses.

Investment in Humble

A financial stake in the company Humble, potentially involving the purchase of shares or other assets to gain a financial return.

FVE Method

An accounting technique where assets and liabilities are valued and reported at their fair value for financial reporting purposes.

Cost Method

An accounting method for investment, where the investment is recorded at cost and is adjusted for dividends received, rather than market value fluctuations.