The Expensing of a Long-Lived Asset Such as a Wastebasket

question 49

Multiple Choice

The expensing of a long-lived asset such as a wastebasket is justified by which of the following accounting rules or principles?

• A)Matching
• B)Materiality
• C)Full disclosure
• D)Consistency

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Definitions:

Target Costing

An accounting strategy that sets prices based on market conditions and then manages costs to meet those prices, aiming for profitability.

Target Selling Price

The price a company aims to sell its product for, determined by market conditions, cost structure, and profit margin goals.

New Product

A good or service that has recently been developed and introduced to the market, offering new features, benefits, or improvements over previous versions.

Target Cost

The maximum amount that can be spent on a product while still earning the required profit margin, based on market-driven pricing.