Which of These Is Not a Possible Source of Error

question 2

Multiple Choice

Which of these is not a possible source of error in calculating closing inventory?

• A) An incorrect cut-off between accounting periods.
• B) Mistakes in counting during the stocktake.
• C) Mistakes in the price at which the goods are sold to customers.
• D) Mistakes in dealing with goods on consignment.

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Definitions:

Overhead Rate

A measure used to allocate overhead costs to produced goods, calculated by dividing total overheads by an allocation base, such as labor hours.

Departmental Overhead Rates

Specific rates used to allocate overhead costs to different departments within a company based on varying criteria.

Machine Hours

represent a measure of the amount of time a machine is in operation, used in costing to allocate expenses based on the use of machinery.

Departmental Overhead Rate

A method to allocate overhead costs to specific departments based on certain criteria, such as machine hours or labor costs.