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 is an advantage of Activity-Based Costing (ABC) over traditional costing methods?

It is less expensive and easier to implement than traditional costing.

It eliminates the need for cost drivers in overhead allocation.

It provides more accurate product costing by allocating overhead based on actual activities.

It ignores indirect costs and focuses only on direct costs.

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Verified step by step guidance

Understand the concept of Activity-Based Costing (ABC): ABC is a costing method that allocates overhead costs based on actual activities that drive costs, rather than using a single predetermined overhead rate as in traditional costing methods.

Compare ABC with traditional costing methods: Traditional costing often uses a single cost driver, such as machine hours or labor hours, to allocate overhead. This can lead to inaccuracies in product costing, especially when products consume resources differently.

Identify the advantages of ABC: ABC provides more accurate product costing because it considers multiple cost drivers and allocates overhead based on the actual activities performed. This helps in better understanding the true cost of producing a product or service.

Evaluate the options provided in the problem: Analyze each statement to determine which one aligns with the advantages of ABC. For example, ABC does not eliminate the need for cost drivers; rather, it uses multiple cost drivers to improve accuracy.

Select the correct answer: Based on the analysis, the correct answer is the statement that highlights the improved accuracy of product costing due to overhead allocation based on actual activities.