An Expense

question 62

Multiple Choice

An expense:

• A)will decrease the amount of net income on the income statement.
• B)will decrease the amount of Common Stock on the balance sheet.
• C)will be increased with a credit to the account.
• D)normally has a credit balance.

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Definitions:

Ending Inventory

The value of goods available for sale at the end of an accounting period, calculated as the beginning inventory plus purchases minus cost of goods sold.

Fixed Cost Per Unit

The total fixed costs divided by the number of units produced, representing the cost allocated to each unit.

Absorption Costing

A bookkeeping approach that incorporates all costs associated with production, including direct materials, direct labor, and both variable and fixed overhead expenses, into a product's cost.

Selling and Administrative Expenses

Operating expenses related to selling products or services and managing the business, excluding production costs.