If Production Exceeds Units Sold, Which of the Following Statements

question 146

Multiple Choice

If production exceeds units sold, which of the following statements is CORRECT?

• A) The same operating income will result under both a variable costing and absorption costing income statement.
• B) A higher operating income will result under a variable costing income statement.
• C) A lower operating income will result under an absorption costing income statement.
• D) A higher operating income will result under an absorption costing income statement.

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Definitions:

Adjusted Trial Balance

A list of all accounts and their balances after adjustments have been made.

Financial Statements

Consolidated records of the financial activities of a business, entity, or individual, including the balance sheet, income statement, and cash flow statement.

Temporary Accounts

Income statement (and sometimes Dividends Declared) accounts that are closed to Retained Earnings at the end of the accounting period.

Balance Sheet

A summary report of a company's financial position, including assets, liabilities, and the equity of its shareholders, at a distinct time.