Which of the Following Adjustments Would Require Decreasing the Liabilities

question 81

Multiple Choice

Which of the following adjustments would require decreasing the liabilities reported on the statement of financial position?

• A) A company uses $400 worth of supplies during the year.
• B) A company records $400 worth of depreciation on equipment.
• C) A company has earned $400 of revenue collected at the beginning of the year.
• D) A company records $400 of wages earned by employees that will be paid next year.

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Definitions:

Unit Product Cost

The cost allocated to a single unit of product, encompassing direct materials, direct labor, and allocated overhead costs.

Income Statement

A financial report outlining the revenues, expenses, and profits or losses of a company over a specific period.

Fixed Manufacturing Overhead

Costs associated with production that do not change with the level of output, such as rent for factory facilities or salaries of permanent staff.

Direct Materials

Raw materials that are traceable to the product and included in the direct costs of manufacturing.