Which of the following is a difference between personal financial statements and business financial statements?
A) Personal financial statements follow the cost principle, whereas business financial statements do not follow the cost principle.
B) Personal financial statements should present assets at estimated current values, whereas business financial statements should present assets at historical cost.
C) Personal financial statements are not governed by GAAP, whereas business financial statements are governed by GAAP.
D) Personal financial statements are prepared for a specific period of time, whereas business financial statements are prepared for a general period.
B
Explanation: B) Contrary to rules employed in the preparation of business financial statements (specifically, the GAAP cost principle), personal financial statements should present assets at their estimated current values and liabilities at their estimated current amounts.
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Cost behavior for variable overhead is more difficult to predict than the behavior of direct materials or direct labor cost for all the following reasons except:
a. The variable portion of overhead must first be separated from the fixed portion. b. Multiple cost drivers are usually involved with variable overhead. c. Direct material and direct labor contain no semi-variable component. d. Variable overhead is a relatively small part of total overhead.
A sample unit could be a:
a) household. b) consumer. c) purchasing agent. d) All of the above