If All Units Produced During March Are Sold, and There

question 38

Multiple Choice

If all units produced during March are sold, and there is no change in the number of units in the beginning finished goods inventory, then:

• A)income determined with absorption costing will equal income determined with direct costing.
• B)ending work in process inventory will increase with absorption costing.
• C)income determined with absorption costing will be higher than income determined with direct costing.
• D)ending finished goods inventory will increase.

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Definitions:

Qualifying Relative

A term used in tax law to describe someone who doesn’t have to live with the taxpayer all year but must meet certain financial support and income criteria to be claimed as a dependent.

Gross Income Test

A requirement for determining if someone can be claimed as a dependent, based on their income level.

Specific Tests

Refer to criteria or conditions applied to determine eligibility or compliance in various contexts, such as tax law or regulations.

Qualifying Child

A dependent of a taxpayer that meets specific IRS criteria related to relationship, age, residence, and support for eligibility for certain tax benefits.