Multiple Choice
In the context of financial accounting, which of the following best describes the primary focus of financial accounting compared to managerial accounting?
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1. Introduction to Accounting
Types of Accounting
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A job costing system is most appropriately used by which type of company?
A
A fast-food restaurant chain
B
A utility company
C
A custom furniture manufacturer
D
A large oil refinery
Verified step by step guidance1
Understand the concept of a job costing system: A job costing system is used to track costs for specific jobs or projects, making it suitable for businesses that produce unique or customized products or services.
Analyze the characteristics of each company type listed in the problem: A fast-food restaurant chain and a utility company typically produce standardized products or services, which are better suited for process costing systems rather than job costing.
Consider the nature of a custom furniture manufacturer: This type of company produces unique, customized furniture pieces for individual customers, requiring detailed tracking of costs for each specific job or project.
Evaluate why a large oil refinery is not suitable for a job costing system: Oil refineries operate on a continuous production basis, producing standardized products, which aligns more with process costing systems.
Conclude that a custom furniture manufacturer is the most appropriate type of company to use a job costing system, as it aligns with the need to track costs for individual, customized jobs.
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