Which of the Following Properly Describes the Impact on the Financial

question 125

Multiple Choice

Which of the following properly describes the impact on the financial statements when a company borrows $20,000 from a local bank?

• A)Net income increases $20,000.
• B)Assets decrease $20,000.
• C)Stockholders' equity increases $20,000.
• D)Liabilities increase $20,000.

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Definitions:

Underapplied

A condition where allocated manufacturing overhead for a period is less than the actual overhead incurred, causing unabsorbed overhead costs.

Job-Order Costing System

A cost accounting system that assigns costs to specific batches or job orders, making it easier to track the cost of producing each item or batch.

Overapplied

Occurs when the allocated manufacturing costs exceed the actual manufacturing costs incurred.

Underapplied

Refers to a situation where the allocated or applied costs in an accounting period are less than the actual costs incurred.