Answer to Question #315544 in Accounting for Jen

Question

Explain why standard prices and costs are recorded in resource entities, but actual prices and costs are recorded in event entities.

Answer 1

Standard prices and costs are recorded in resource entities because they are estimated values that will use up resources (goods, services or money) but cannot be recorded in the financial statements of a company; actual prices and costs are recorded in event entities because they are actually incurred, and events business transactions that affect resources.