Maxim Company Sells Auto Parts

question 5

Multiple Choice

Maxim Company sells auto parts.The company employs a periodic inventory system.Identify all the effects on the accounting equation.
-Recorded cash sales for the day.

• A)Increase in assets
• B)Decrease in assets
• C)Increase in liabilities
• D)Decrease in liabilities
• E)Increase on owners' equity
• F)Decrease in owners' equity
• G)Increase in assets and increase in owners' equity
• H)Decrease in assets and decrease in owners' equity
• I)Increase in liabilities and decrease in owners' equity
• J)Decrease in liabilities and increase in owners' equity

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Definitions:

Factory Overhead Costs

Indirect expenses related to the manufacturing process that cannot be traced directly to specific units produced, such as utilities and rent for the production facility.

Direct Materials Cost

The cost of raw materials and components used directly in the production of goods or provision of services, directly traceable to the finished product.

Manufacturing Process

The manufacturing process involves the steps, operations, and stages companies use to convert raw materials into finished goods through machinery, labor, and other resources.

Direct Labor Cost

Expenses that are directly attributed to the production of goods or services, including wages of workers.