The Immediate Write-Off of Overhead Variances Is Used Because ________

question 105

Multiple Choice

The immediate write-off of overhead variances is used because ________.

• A) it is simpler
• B) the company has probably sold most of the goods produced during the period so prorating the variance to inventory accounts would not produce materially different results
• C) the extra overhead costs result from inefficiencies in the current period and therefore do not represent assets
• D) all of the above

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Definitions:

Financial Statements

Documents that give an overview of a business's financial condition in both short and long term, including but not limited to, income statements, balance sheets, and statements of cash flows.

Worksheet

A worksheet is often a piece of paper or a digital document used by accountants to prepare adjustments and end-of-period financial statements.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period of time, leading to its net income or loss.

Statement of Owner's Equity

A financial document showing the changes in the equity of a company over a specified period, including additions through earnings and subtractions due to withdrawals.