What Is the Effect of the Following Journal Entry

question 26

Multiple Choice

What is the effect of the following journal entry?

• A) to allocate $15 of overhead as rework costs
• B) to expense $125 of overhead as rework costs
• C) to set up rework costs on the balance sheet
• D) to allocate $15 of overhead as rework costs, and to expense $125 of overhead as rework costs
• E) to accumulate rework costs so they can be assigned to a specific job

---

Definitions:

Intangible Assets

Non-physical assets possessed by a business, such as patents, trademarks, and goodwill, which can generate economic benefit.

Cash Flow

The total amount of money being transferred in and out of a business, especially as affecting liquidity.

Assets

Economic resources or owned valuables that an individual, company, or country possesses, which are expected to provide future benefits.

Dividends

A corporation allocates a segment of its profits to its shareholders in the form of payments, distributing its earnings among them.