Which of the Following Statements Is Correct with Respect to a Loss

question 30

Multiple Choice

Which of the following statements is correct with respect to a loss on the sale of a depreciable asset?

• A)Net income decreases and total assets increase.
• B)Net income decreases and stockholders' equity increases.
• C)Total assets decrease and stockholders' equity decreases.
• D)Total assets increase and stockholders' equity decreases.

---

Definitions:

Weighted-Average Method

This method computes the cost of goods sold and the value of ending inventory by taking the mean cost of every unit available for sale throughout the period.

Cost Reconciliation

The process of analyzing and adjusting differences between actual costs and standard or budgeted costs.

Process Costing

An accounting method typically used in manufacturing, where costs are assigned to batches or processes, useful for products that are indistinguishable from each other.

Conversion Costs

The sum of direct labor and manufacturing overhead costs, representing the costs to convert raw materials into finished goods.