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

3. Accrual Accounting Concepts

Adjusting Entries: Depreciation

Financial Accounting

3. Accrual Accounting Concepts

Adjusting Entries: Depreciation

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Multiple Choice

Which of the following best describes the formula \((\text{actual cost per unit} - \text{standard cost per unit}) \times \text{actual quantity}\)?

Materials quantity variance

Materials price variance

Accumulated depreciation

Depreciation expense

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Verified step by step guidance

Understand the formula: The formula

({actual}_{cost} - {standard}_{cost}) \times {actual}_{quantity}

compares the actual cost per unit to the standard cost per unit and multiplies the difference by the actual quantity. This formula is used to calculate variances in cost accounting.

Identify the type of variance: The formula specifically measures the difference in cost per unit (price) rather than the quantity of materials used. This indicates that the formula is related to a price variance rather than a quantity variance.

Clarify the concept of 'Materials Price Variance': Materials price variance is the difference between the actual cost of materials and the standard cost of materials, multiplied by the actual quantity purchased. It helps businesses understand if they are paying more or less for materials than expected.

Eliminate incorrect options: 'Materials quantity variance' measures the difference in the quantity of materials used, not the price. 'Accumulated depreciation' and 'Depreciation expense' are unrelated to cost variances and pertain to fixed asset accounting.

Conclude the correct answer: Based on the formula and its purpose, the correct description is 'Materials price variance,' as it focuses on the cost per unit difference multiplied by the actual quantity.