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

Which of the following best describes what an allocation base should be in accounting?

A fixed percentage applied to all expenses regardless of activity

A measure unrelated to the actual consumption of resources

A factor that has a direct cause-and-effect relationship with the cost being allocated

A random value chosen to distribute costs equally among departments

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Verified step by step guidance

Understand the concept of an allocation base: In accounting, an allocation base is a factor used to assign costs to cost objects, such as departments, products, or services. It should reflect the actual consumption of resources and have a direct cause-and-effect relationship with the costs being allocated.

Analyze the options provided: Review each option to determine whether it aligns with the definition of an allocation base. For example, a fixed percentage applied to all expenses regardless of activity does not account for actual resource usage, and a random value chosen to distribute costs equally among departments lacks a cause-and-effect relationship.

Focus on the correct definition: The correct allocation base should be a factor that directly correlates with the cost being allocated. This ensures that costs are distributed fairly and accurately based on resource consumption.

Eliminate incorrect options: Discard options that do not meet the criteria of a direct cause-and-effect relationship or are unrelated to actual resource usage.

Select the correct answer: Based on the analysis, choose the option that best describes an allocation base as a factor with a direct cause-and-effect relationship with the cost being allocated.