If Overapplied Factory Overhead Is Material,the Account Is Closed by a Credit

question 146

True/False

If overapplied factory overhead is material,the account is closed by a credit to Cost of Goods Sold.

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Definitions:

Accrual Basis

An accounting method where revenues and expenses are recorded when they are earned or incurred, regardless of when cash transactions occur.

Cash Basis

An accounting method where revenue is recorded when cash is received, and expenses are recorded when cash is paid out, without regard to when the transactions actually occur.

Indirect Method

A technique used in cash flow statement preparation that adjusts net income for changes in non-cash accounts to compute net cash provided by operating activities.

Patent Amortization

The gradual expense recognition of a patent's cost over its useful life to reflect the consumption of the patent's value over time.