A Law Firm Wanting to Track the Costs of Serving

question 5

Multiple Choice

A law firm wanting to track the costs of serving different clients may use a:

• A)process cost system.
• B)job order cost system.
• C)cost control system.
• D)standard cost system.

---

Definitions:

Amortization Assumption

The accounting practice of gradually writing off the initial cost of an intangible asset over its useful life.

Interest Expense

The cost incurred by an entity for borrowed funds; interest payments made on any form of debt over a given period.

Effective Interest Method

An accounting practice used to allocate loan discounts or premiums over the life of the loan, reflecting the financial interest rate more accurately.

Discount Amortization

The process of gradually reducing the discount on bonds payable or notes payable over the life of the debt.