Ch. 2 - Chapter2 Basic Managerial Accounting Concepts 1....

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Chapter 2 Basic Managerial Accounting Concepts 1. THE MEANING AND USES OF COST A. Cost Cost is the cash (or cash equivalent) sacrificed for goods or services that are expected to produce current or future benefits. Expenses are expired costs. Accumulating costs is a way that costs are measured and recorded. A cost object is any item such as products, departments, customers, and activities for which costs are measured and assigned. B. Tracing Direct Costs Direct Tracing is to identify and assign costs to a cost object that are specifically or physically associated with the cost object. Direct costs can be easily and accurately traced to a cost object. The more costs that can be traced to a cost object, the more accurate are the cost assignments. Indirect costs cannot be easily and accurately traced to a cost object. C. Assigning Indirect Costs Allocation is used to assign indirect costs to a cost object, such as a product or department, using a reasonable and convenient method. D. Other Categories of Cost
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This note was uploaded on 01/14/2012 for the course ACCT 2203 taught by Professor Staff during the Spring '08 term at Oklahoma State.

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Ch. 2 - Chapter2 Basic Managerial Accounting Concepts 1....

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