If a Corporation Shows a Net Loss on Its Income

question 54

Multiple Choice

If a corporation shows a net loss on its income statement, which of the following is true?

• A)The company may not be able to sell stock.
• B)The company may continue to have a net increase in cash.
• C)The company may not be able to pay dividends.
• D)The company may continue to have an increase in retained earnings.

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Definitions:

Plantwide Predetermined Manufacturing Overhead Rate

A single overhead rate calculated for an entire manufacturing plant, applied to all jobs or products to allocate manufacturing overhead costs.

Machine-Hours

Machine-Hours indicate the total hours that machinery is operating during a specific period of time.

Manufacturing Overhead

All indirect costs associated with the manufacturing process, such as utilities, maintenance, and management salaries.

Markup

The sum added to the purchase price of products to account for overhead costs and profit, setting the sales price.