Failure to Record a Liability Probably Will

question 105

Multiple Choice

Failure to record a liability probably will

• A)result in an overstated net income.
• B)result in overstated total liabilities and stockholders' equity.
• C)have no effect on net income.
• D)result in overstated total assets.

---

Definitions:

Job-order Costing System

An accounting system that accumulates costs per individual job or project to calculate profitability and costs.

Indirect Labor Cost

Costs related to employees who assist in the production process but do not actively work on the product, such as maintenance staff and supervisors.

Manufacturing Overhead

All indirect costs associated with the production process, including utilities, depreciation, and supervision expenses, not directly tied to specific product units.

Job-order Costing System

An accounting method that assigns costs to specific production batches or projects, tracking the direct and indirect costs involved.