The Use of Reversing Entries

question 71

Multiple Choice

The use of reversing entries

• A) is a required step in the accounting cycle.
• B) changes the amounts reported in the financial statements.
• C) simplifies the recording of subsequent transactions.
• D) is required for all adjusting entries.

---

Definitions:

Predetermined Overhead Rate

A rate calculated before a production period that estimates the amount of manufacturing overhead cost per unit of allocation base, used to apply overhead costs to goods produced.

Casting Department

A specific section within a manufacturing facility where the process of casting—shaping material by pouring it into a mold and allowing it to solidify—is performed.

Machine-Hour

A unit of measure for the operational time of machinery, critical for calculating production costs and efficiency in a manufacturing context. This is essential in allocating costs based on the usage duration of machinery.

Predetermined Overhead Rate

A rate calculated before the period begins, used to allocate overhead costs to products or services based on a certain activity base.