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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Accumulating costs means that

  1. a. costs must be summed and entered on the income statement.
  2. b. each cost must be linked to some cost object.
  3. c. costs must be measured and tracked.
  4. d. costs must be allocated to units of production.
  5. e. costs have expired and must be transferred from the balance sheet to the income statement.

To determine

Identify the meaning of accumulating costs.

Explanation

Accumulating Costs:

Accumulating costs can be defined as a way to measure and record the costs incurred by a company. For example, when a company receives the electricity bill, the accountant records an addition to utility expenses and accounts payable. This represents the way of accumulating costs.

c.

As the accumulating cost means to record all the costs in the books of the company, it is required to measure and keep track of these costs. Therefore, this option is correct.

a.

Accumulating costs are not summed up and recorded in the income statement. These costs may also affect other financial statements...

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