- October 19, 2015 at 9:47 pm #277674
Which of the statements regarding the SOP&L for a limited liability company is correct?
I don’t get the reasoning behind why the following is NOT the answer:
Accounting standards define the expenses which are reported under the heading of ‘COS’
Please provide insight.October 20, 2015 at 7:13 am #277734
They don’t define which expenses – it depends on the nature of the product which expenses are involved in the production.October 21, 2015 at 8:57 pm #278267
Sorry but what do you mean by nature? For instance if absorption or marginal costing is used?October 22, 2015 at 7:49 am #278326
The type of product.
The standard says that cost of sales should include all costs of production – it does not define which expenses are costs of production. (The expenses involved in producing paper for example, are going to be different from the expenses involved in producing frozen food!)
Marginal costing is not allowed in financial accounts – it is a management accounting concept but not at all relevant for Paper F3. You should watch the lectures on inventories.October 23, 2015 at 5:54 pm #278595
That was a major point. Thanks for clarifying that up! Really appreciate it.October 23, 2015 at 7:58 pm #278621
No problem 🙂
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