The Decline in Merchandise Inventory from Cost to NRV Is

question 127

True/False

The decline in merchandise inventory from cost to NRV is recorded in an adjusting entry at the end of the period.

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Definitions:

Overapplied Overhead

Occurs when the allocated manufacturing overhead costs for a period exceed the actual overhead costs incurred.

Manufacturing Overhead Account

An account that accumulates all indirect costs associated with the manufacturing process, excluding direct materials and direct labor.

Adjustment

An adjustment in accounting is an entry made in journal accounts that represents a correction or modification to prior financial records.

Predetermined Overhead Rate

A rate used to apply manufacturing overhead costs to products or job orders, calculated before the periods in which it is applied.