The Changes in Account Balances of the Clearwater Corporation During

question 44

Multiple Choice

The changes in account balances of the Clearwater Corporation during 2011 are presented below:

Assuming there are no changes in retained earnings except for net income and a dividend payment of $19,500, the net income for 2011 should be

• A) $6,000.
• B) $13,500.
• C) $19,500.
• D) $25,500.

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Definitions:

Direct Labor

The price of paying staff who are directly participating in the manufacturing of goods or provision of services.

Direct Materials

Basic substances used in production that can be directly integrated and precisely identified in the final product.

Factory Overhead

Indirect costs associated with manufacturing, including expenses such as rent, utilities, and maintenance that are not directly tied to the production of goods.

Factory Overhead

Expenses incurred in manufacturing excluding the costs of direct labor and materials.