If the Accountant Failed to Make an Adjusting Entry at the End

question 94

Multiple Choice

If the accountant failed to make an adjusting entry at the end of the period to record depreciation for the period, the omission will cause:

• A)An overstatement of assets.
• B)An overstatement of expenses.
• C)An understatement of assets.
• D)An overstatement of liabilities.
• E)An overstatement of revenues.

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Definitions:

Manufacturing Overhead

All indirect costs associated with manufacturing a product, which includes costs not directly tied to the product such as maintenance, utilities, and supervisor salaries.

Underapplied Manufacturing Overhead

Refers to the situation when the allocated manufacturing overhead costs are less than the actual overhead costs incurred.

Manufacturing Overhead Control

A way of monitoring and managing the costs associated with the indirect elements of production, such as utilities, maintenance, and factory supplies.

Overhead Costs

All costs on the income statement except for direct labor, direct materials, and direct expenses, covering expenses like rent, utilities, and insurance.