Which of the Following Statements About Under- or Overapplied Manufacturing

question 36

Multiple Choice

Which of the following statements about under- or overapplied manufacturing overhead is correct?

• A) After the entry to transfer over- or underapplied overhead to Cost of Goods Sold is posted Manufacturing Overhead will have a zero balance.
• B) When Manufacturing Overhead has a credit balance overhead is said to be under-applied.
• C) At the end of the year under- or overapplied overhead is eliminated by a closing entry.
• D) When annual financial statements are prepared overapplied overhead is reported in current liabilities.

---

Definitions:

Employee Options

A form of employee benefit that gives employees the right to purchase company stock at a set price at a future date.

Debt Options

Financial instruments giving the holder the right, but not the obligation, to deal with debt under specified conditions.

Calls

Options contracts giving the holder the right, but not the obligation, to buy a specified amount of an underlying asset at a specified price within a specified time.

American Options

Options that can be exercised at any time up to the expiration date, unlike European options which can only be exercised on the expiration date.