The Trial Balance Is Used to Determine If

question 169

Multiple Choice

The trial balance is used to determine if:

• A)total assets equal total liabilities.
• B)total debits of all the accounts equal total credits of all the accounts.
• C)total debits of the income statement accounts equal the total credits of the income statement accounts.
• D)total debits of the balance sheet accounts equal the total credits of the balance sheet accounts.

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Definitions:

Absorption Costing

In this method of accounting, the price of manufacturing a product is calculated by summing the costs of direct materials, direct labor, and all manufacturing overheads, variable and fixed alike.

Fixed Manufacturing Overhead

The total of all costs related to manufacturing that do not change with the level of production, such as salaries of managers and rent of the factory.

Divisional Segment Margin

The profit margin for a specific division or segment of a company, calculated by subtracting direct and allocated expenses from segment revenues.

Net Operating Income

A measure of a company's profitability from its regular business operations, excluding non-operating income and expenses.