It Is Obvious That an Error Occurred in the Preparation

question 109

Multiple Choice

It is obvious that an error occurred in the preparation and/or posting of closing entries if:

• A) only permanent accounts appear on the post-closing trial balance.
• B) all balance sheet accounts have zero balances.
• C) the income summary account is debited for the amount of net income for the period.
• D) the owner's capital account is debited for the amount of the net loss for the period.
• E) all revenue and expense accounts have zero balances.

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Definitions:

Labour Efficiency Variance

The difference between the actual hours worked and the standard hours expected to produce a certain level of output, multiplied by the standard labour rate.

Quality Raw Materials

High-standard, unprocessed or minimally processed inputs used in the production of goods, directly affecting the quality of the finished product.

Labour Time Standard

A benchmark or norm established for the amount of time required to perform a specific task or activity under normal working conditions.

Direct Material Price Variance

The difference between the actual cost of direct materials and the expected (or standard) cost.