At the Current Year-End,Simply Company Found That Its Overhead Was

question 60

Multiple Choice

At the current year-end,Simply Company found that its overhead was underapplied by $2,500,and this amount was not considered material.Based on this information,Simply should

• A)Close the $2,500 to Cost of Goods Sold.
• B)Close the $2,500 to Finished Goods Inventory.
• C)Do nothing about the $2,500,since it is not material,and it is likely that overhead will be overapplied by the same amount next year.
• D)Carry the $2,500 to the income statement as "Other Expense".
• E)Carry the $2,500 to the next period.

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Definitions:

Permanent Accounts

Balance sheet accounts whose balances are carried over into the next accounting period.

Balance Sheet

A financial statement that shows an entity's assets, liabilities, and shareholders' equity as of a specific date, providing a snapshot of its financial condition.

Financial Statements

Reports that provide an overview of a company's financial condition, including balance sheets, income statements, and cash flow statements.

Income Summary

An account used in the closing process that summarizes the revenues and expenses for a period, helping to determine the net income or loss.