Ace Builders Had the Following Transactions in June: Earned $4,000

question 122

Multiple Choice

Ace Builders had the following transactions in June: Earned $4,000 "on account;" collected $3,000 from a customer that was owed from a previous month; incurred $500 of repair expense and paid cash to the repairman; paid $1,200 to a supplier that it owed from the previous month; paid out $800 in cash drawings to the owner.
-How much was the Net income in June?

• A) $500
• B) $5,700
• C) $2,700
• D) $3,500

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Definitions:

Predetermined Rate

An estimated cost rate established before the start of a period and used to apply costs uniformly throughout the period.

Actual Cost

The realized expenses incurred in the production or acquisition of goods and services, as opposed to estimated or standard costs.

Overhead Incurred

The actual overhead expenses that a company has experienced during a specific period, which may include costs related to rent, utilities, or administrative salaries.

Overhead Account

An accounting term that refers to all ongoing business expenses not directly tied to a specific product or service.