An Entity Should Recognise the Cost Fo of Profit Sharing

question 2

True/False

An entity should recognise the cost fo of profit sharing plans as an expense not as a distribution of profits.

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Definitions:

Processing Department

A division or section in a manufacturing facility where a specific type of processing or production takes place.

Equivalent Units

A method in cost accounting used to compute the work done by the production in terms of fully manufactured units, considering both completed and in-progress goods.

Weighted-average

A calculation that takes into account the varying degrees of importance of the numbers in a data set, giving weight to each number based on its significance.

Labor

The human effort, both physical and mental, used to produce goods or services, which is typically compensated by wages.