Refer to Scenario 1

question 9

Multiple Choice

Refer to Scenario 1.2 below to answer the question(s) that follow.
SCENARIO 1.2: A scientist wants to understand the relationship between automobile emissions and the level of global warming. The scientist collects data on the volume of automobile emissions and the levels of global warming over time. The scientist concludes that a 1% increase in automobile emissions causes a 0.0003% increase in average global temperatures. From this information he concludes that the automobile emissions are harmful to the environment and should be reduced to stop the increase in global temperatures.
-Refer to Scenario 1.2. The statement, "automobile emissions are harmful to the environment and should be reduced to stop the increase in global temperatures," is an example of

• A) positive economics.
• B) marginal economics.
• C) normative economics.
• D) the fallacy of logic.

Identify and correct errors in the preparation of the adjusting entries.

Journalize adjusting entries for unearned revenues, prepaid expenses, accrued expenses, and depreciation.

Explain the effects of omitting adjusting entries on financial statements.

Prepare necessary journal entries for payroll adjustments.

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Definitions:

Factory Overhead Account

Represents all the indirect costs associated with running a production facility that are not directly tied to a specific product.

Overhead Allocation Base

A measure used to distribute overhead costs to various products or service units within a business.

Overhead Costs

Indirect expenses related to the operation of a business, such as utilities, rent, and administrative salaries, not directly tied to a specific product or service.

Predetermined Overhead Rate

An estimated charge per unit of activity used to allocate overhead costs to products or services, calculated before the costs are actually incurred.