When Production Quantity Exceeds Sales, Throughput Costing Results in Reporting

question 128

True/False

When production quantity exceeds sales, throughput costing results in reporting lower operating income than variable costing.

---

Definitions:

Doubtful Accounts

Receivable accounts that may potentially become bad debts as the likelihood of collection is uncertain.

Balance Sheet

The balance sheet is a financial statement that shows a company's financial position at a specific point in time, listing assets, liabilities, and shareholders' equity.

Allowance Method

Bases bad debt expense on an estimate of uncollectible accounts.

Bad Debt Expense

An expense reported on the income statement, representing the value of accounts receivable deemed non-collectible.