When Production Is Greater Than Sales

question 42

Multiple Choice

When production is greater than sales

• A)Net income under absorption costing will be greater than or less than net income under variable costing depending on the selling and administration costs.
• B)Net income under absorption costing will be equal to net income under variable costing.
• C)Net income under absorption costing will be less than net income under variable costing.
• D)Net income under absorption costing will be greater than net income under variable costing.

Grasp the uses and implications of subsidiary inventory ledgers and physical inventories.

Recognize the concepts of direct disposal costs, days' sales in inventory, and the importance of inventory valuation disclosure.

Understand the principle and effect of the lower of cost or market inventory valuation method.

Appreciate the consequences of inaccurate inventory reporting on financial performance and owner's equity.

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Definitions:

Round-Trip Transaction

A term referring to the complete process of buying and then selling a financial instrument, or vice versa.

Exchange Rates

The evaluation of one currency's value for the intention of exchanging it for another, indicating how much one currency equates to in another currency.

Airport Kiosk

An automated terminal located at airports that allows passengers to perform tasks such as check-in, ticket printing, and information access.

GST

GST stands for Goods and Services Tax, which is a value-added tax levied on most goods and services sold for domestic consumption.