Question

Which of the following statements is true of traceability?

a. it used well-specified economic events as inputs, and its processes follow certain rules and conventions
b. it is used for investment decisions, stewardship evaluation, activity monitoring, and regulatory measures
c. it is the ability to assign a cost directly to a cost object in an economically feasible way by means of a causal relationship
d. it is concerned with determining what activities should be performed by managers and assessing how well they are performed

Answer 1

Traceability in business is the ability to assign costs directly to a cost object due to a causal relationship, increasing accuracy and supporting ethical financial practices.

Step-by-step explanation:

The true statement about traceability is: it is the ability to assign a cost directly to a cost object in an economically feasible way by means of a causal relationship. This concept is crucial in fields such as accounting and management, as it allows for accurate tracking of costs and enhances the precision of cost allocation. Traceability ensures that costs are assigned based on empirical evidence, thereby increasing accuracy in financial reporting and decision-making.

It is not primarily concerned with investment decisions or the assessment of managerial performance but focuses on the cost allocation process. The concept of traceability can also support a company's code of ethics by promoting transparency and accountability in cost reporting and can be part of a case study analysis to scrutinize financial processes and controls.