A Credit Memorandum on a Bank Statement Indicates

question 210

Multiple Choice

A credit memorandum on a bank statement indicates:

• A) A decrease in the bank's asset account.
• B) A decrease in the bank's liability account.
• C) An increase in the bank's asset account.
• D) An increase in the bank's liability account.
• E) An increase in the bank's expense account.

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Definitions:

Variable Costing

An accounting method that includes only variable production costs—direct materials, direct labor, and variable manufacturing overhead—in the cost of goods sold, treating fixed manufacturing costs as period costs.

Fixed Overhead

The set of expenses that do not vary with the level of production or sales, such as rent, salaries, and insurance.

Product Costs

Costs directly associated with the creation of a product, including materials, labor, and manufacturing overhead.

GAAP

Generally Accepted Accounting Principles, a set of standards and procedures for financial reporting used in the United States.