Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

1. Introduction to Accounting

Types of Accounting

Financial Accounting

1. Introduction to Accounting

Types of Accounting

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Multiple Choice

Insurance on a company’s buildings would most likely be classified as a ______________ cost?

direct

fixed

variable

period

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Verified step by step guidance

Understand the nature of the cost: Insurance on a company’s buildings is a cost incurred regardless of the level of production or sales activity. It does not vary with the number of units produced or sold.

Classify the cost type: Fixed costs are expenses that remain constant over time and do not change with the level of business activity. Insurance premiums typically fall under this category because they are paid periodically and do not fluctuate based on production or sales.

Determine whether the cost is direct or indirect: Direct costs are those that can be directly traced to a specific product or service. Since building insurance is related to the overall operation of the company and not tied to a specific product, it is considered an indirect cost.

Evaluate whether the cost is a period cost: Period costs are expenses that are not directly tied to the production process and are expensed in the period they are incurred. Insurance on buildings is typically classified as a period cost because it is not part of the manufacturing process.

Conclude the classification: Based on the analysis, insurance on a company’s buildings is most likely classified as a fixed and period cost.