The Level of Inventory of a Manufactured Product Has Increased

question 17

Multiple Choice

The level of inventory of a manufactured product has increased by 4,000 units during a period. The following data are also available: The effect on operating income if absorption costing is used rather than variable costing would be a

• A)$44,000 decrease
• B)$44,000 increase
• C)$64,000 increase
• D)$64,000 decrease

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Definitions:

Corrected Trial Balance

A trial balance prepared after all adjustments, errors, and corrections have been made, serving as the basis for financial statement preparation.

Accounts Debited

Accounts that are increased with a debit entry, typically including assets and expenses.

Trial Balance Totals

The aggregate amounts of all debit and credit balances in a company's ledger accounts at a specific point in time, used to ensure that debits equal credits.

Cash Withdrawal

The process of taking out cash from a bank account or the act of receiving cash from any fund, essentially reducing the balance.