Which One of the Following Errors Causes Net Income to Be

question 32

Multiple Choice

Which one of the following errors causes net income to be overstated?

• A) Failure to record collection of an account receivable
• B) Failure to record depreciation expense
• C) Failure to accrue revenue earned but not billed
• D) Failure to record fees received in advance that are earned by the end of the period

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Definitions:

Manufacturing Overhead

includes all indirect costs related to manufacturing, such as salaries of supervisors and maintenance costs, that are not directly tied to a specific product.

Job-order Costing

A costing method used by companies to assign manufacturing costs to individual products or batches, ideal for customized orders.

Overhead Cost

A rephrased definition: Expenses related to the day-to-day running of a business that are not directly linked to any specific product or service, such as administrative expenses.

Work in Process

The cost of unfinished goods in the manufacturing process including labor, material, and overhead.