Purchasing Supplies on Account Would

question 28

Multiple Choice

Purchasing supplies on account would:

• A)increase total assets and decrease total liabilities.
• B)increase total liabilities and decrease total assets.
• C)increase total assets and increase total liabilities.
• D)increase total liabilities and increase stockholders' equity.

---

Definitions:

Underapplied Manufacturing Overhead

A situation where the allocated manufacturing overhead costs are less than the actual overhead costs incurred, leading to an underestimation of product costs.

Overapplied Manufacturing Overhead

Refers to a situation where the estimated manufacturing overhead cost is more than the actual manufacturing overhead incurred during a period.

Debit

An accounting entry that increases an asset or expense or decreases a liability, equity, or revenue.

Credit

A financial term defining the ability to obtain goods or services before payment, based on the trust that payment will be made in the future.