Tra Corporation Is Analyzing Its Account Balances for 2012

question 146

Multiple Choice

Tra Corporation is analyzing its account balances for 2012.As of the end of 2012, a debit balance of $4,000 remains in the manufacturing overhead account.What impact will this have on the financial statements?

• A)It will increase assets by $4,000 and have no effect on income.
• B)It will increase income by $4,000.
• C)It will reduce income by $4,000.
• D)It will decrease gross profit but have no effect on income.

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Definitions:

Consequential Damages

Compensation for losses that directly and foreseeably result from the breach of a contract or other wrongful act.

Lost Profits

Damages claimed in a lawsuit representing the profits one would have made but for another party's wrongful act.

Speculative

Involving a high risk of loss but also offering the potential for substantial gains, often based on future expectations rather than current realities.

Insolvent

Being insolvent means lacking the financial ability to pay debts when they are due, which can lead to bankruptcy or other legal financial proceedings.