Provide a brief example to illustrate that externally reported financial accounting information must be based in part on estimates, judgments, and assumptions
What will be an ideal response?
To account for the use of long-lived equipment, estimates must be made of the lifetime and scrap value of that equipment.
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Rees Manufacturing uses a standard cost system
Standards for direct materials are as follows: Direct materials (pounds per unit of output) 3 Cost per pound of direct materials $6 Actual purchases of direct materials for the current month are 10,000 pounds for $48,600. Planned and actual production for the month is 3,100 units. Rees has issued 10,000 pounds of direct materials to production. The journal entry to record this transaction is ________. A) a debit to Work-in-Process Inventory for $45,198, a credit to Raw Materials Inventory for $55,800, and a debit to Direct Materials Efficiency Variance for $10,602 B) a debit to Work-in-Process Inventory for $45,198, a credit to Raw Materials Inventory for $60,000, and a debit to Direct Materials Efficiency Variance for $14,802 C) a debit to Work-in-Process Inventory for $55,800, a credit to Raw Materials Inventory for $60,000, and a debit to Direct Materials Efficiency Variance for $4,200 D) a debit to Work-in-Process Inventory for $60,000, a credit to Raw Materials Inventory for $48,600, and a credit to Direct Materials Efficiency Variance for $60,000
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Indicate whether the statement is true or false.