How Many of These Statements Are True of the Composite

question 24

Multiple Choice

How many of these statements are true of the composite rate depreciation approach?
The general asset mix of a functional group of assets is assumed to be the same through new assets are added and old assets are sold.
Additions and retirements are assumed to occur uniformly throughout the year.
The method is often used by business entities with many similar assets in one class.
Profits and losses on disposal of assets are debited/credited to the accumulated depreciation account so no losses or profits on disposal are recorded.

• A) 1
• B) 2
• C) 3
• D) 4

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Definitions:

Actual Overhead Costs

The real expenses incurred for overhead in a specific period, as opposed to budgeted or estimated costs.

Job Costing System

An accounting methodology used for assigning manufacturing costs to individual units or projects, tracking expenses accurately for each job.

Allocation Bases

Criteria or standards used to distribute overhead costs among various cost objects, based on factors like time, machine hours, or labor costs.

Overhead Resources

Expenses related to the business operations that are not directly tied to a specific product or service, such as utilities, rent, and administrative salaries.