The Account Titles to Be Responded to Are Provided in No

question 112

Short Answer

The account titles to be responded to are provided in no particular order. Assume that all accounts have normal balances according to whether the account is increased by a debit or increased by a credit.

Required:

In column A, indicate whether a debit will:

1. Increase the account balance, or
2. Decrease the account balance.

In column B, classify each account according to the following scheme. For contra accounts, indicate the classification of the account to which it relates.

1. A current asset in the balance sheet.
2. A noncurrent asset in the balance sheet.
3. A current liability in the balance sheet.
4. A long-term liability in the balance sheet.
5. A permanent equity account in the balance sheet.
6. A revenue account in the income statement.
7. An expense account shown in the income statement.
8. Account does not appear in either the balance sheet or the income statement.


-Buildings and equipment (B&E)

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Definitions:

Traditional Costing

An accounting method that allocates manufacturing overhead costs to products based on the volume of production resources consumed.

Direct Labor-Hours

A measure of the work done by employees directly involved in the manufacturing process, counted in hours.

Activity Cost Pools

A grouping of all costs associated with a specific activity, used in activity-based costing to more accurately allocate overhead costs.

Activity Rates

Rates used in Activity-Based Costing to assign overhead costs to products or services, based on specific activities that drive those costs.