An Accountant Recently Debited Work-In-Process Inventory and Credited Manufacturing Overhead

question 10

Multiple Choice

An accountant recently debited Work-in-Process Inventory and credited Manufacturing Overhead at a company that uses normal costing. The accountant was:

• A) applying a predetermined overhead amount to production.
• B) recognizing receipt of the factory utilities bill.
• C) recording a year-end adjustment for an insignificant amount of underapplied overhead.
• D) recognizing actual overhead incurred during the period.
• E) recognizing the completion of production.

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Definitions:

Current Assets

Resources a business plans to change into cash, dispose of, or use up within either a year or its operating cycle, depending on which period extends further.

Current Liabilities

Financial obligations of a business that are due and payable within one year.

Total Liabilities

The sum of all financial obligations a company owes to outside parties, including loans, accounts payable, and mortgage obligations.

State Sales Tax

A tax imposed by a state on the sale of goods and services, typically calculated as a percentage of the sales price.