Which of these represents a typical purchasing cost?
Show answer Hide answer
Answer: C. insurance
Explanation
Insurance and storage costs are typically classified as carrying or holding costs rather than direct purchasing costs.
- Subject
- Accounting and Finance
- Category
- Accounting
- Topic
- —
- Difficulty
- medium
Related questions
Q1. When total debit balances equal total credit balances, the trial balance merely verifies the ____________ and does not guarantee that recording or posting errors are absent.
Show answer Hide answer
Answer: A. Arithmetic accuracy
A trial balance verifying that debits equal credits only proves arithmetic accuracy and does not catch certain errors like complete omission. Mathematical balance confirms that equal debits and credits were posted. Howev...
Q2. A debit balance shown on a bank pass book indicates _____________?
Show answer Hide answer
Answer: B. Bank Overdraft
A debit balance on a bank pass book represents a bank overdraft from the bank's perspective. Bank passbooks reflect the bank's own liability ledgers regarding the customer's account. A debit on the bank's books means the...
Q3. Accounting for depreciation is essentially a process of ____________?
Show answer Hide answer
Answer: C. Allocation
Accounting for depreciation is fundamentally a process of allocating the historical cost of an asset over its useful life. It does not attempt to reflect the current market value of the asset. Instead, it matches the cos...
Q4. Which of the following statements is/are true regarding the direct write-off method for bad debt expenses?
Show answer Hide answer
Answer: D. All of the above
The direct write-off method fails to match bad debt expense with related sales revenues and violates the matching principle. It delays recognizing uncollectible accounts until a specific customer defaults in a later peri...
Q5. Recording a provision for doubtful debts that is presented as a year-end adjustment requires ____________?
Show answer Hide answer
Answer: A. Debit Profit and Loss Account and deduct the provision from debtors
Recording a provision for doubtful debts requires debiting the Profit and Loss Account and deducting the amount from accounts receivable. This adjusting entry recognizes estimated future credit losses on current sales. D...
Q6. The charge of depreciation directly reduces the ____________?
Show answer Hide answer
Answer: D. Capital
Depreciation expense reduces net income, which ultimately decreases owner's equity or capital. At period-end, expense accounts are closed into retained earnings or capital accounts. Consequently, recording depreciation l...