Indicate How Each Event Affects the Elements of Financial Statements

question 25

Essay

Indicate how each event affects the elements of financial statements.Use the following letters to record your answer in the box shown below each element.You do not need to enter amounts.Enter only one letter for each element.

-Sierra Mining is the defendant in a $3 million lawsuit involving damage to the environment.Sierra's attorneys have advised the company that the outcome of the lawsuit is probable,and the likely settlement will be $750 thousand.

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Definitions:

Raw Materials

Raw materials are basic and unprocessed inputs used in the manufacturing of goods.

Manufacturing Overhead

Indirect manufacturing costs such as the expenses for factory maintenance and equipment depreciation.

Raw Materials Used

The total value of all raw materials consumed in the production process over a specified period.

Factory Depreciation

The systematic allocation of the cost of physical assets used in the manufacturing process over their useful lives.