Failure to Adjust for Accrued Wages at Year End Will

question 130

Multiple Choice

Failure to adjust for accrued wages at year end will result in an

• A) overstatement of liabilities.
• B) understatement of assets.
• C) understatement of stockholders' equity.
• D) overstatement of net income.

---

Definitions:

Manufacturing Overhead

The indirect costs involved in making a product, excluding direct materials and direct labor expenses.

Predetermined Overhead Rate

A rate used to apply manufacturing overhead to products or job orders, computed in advance for each period.

Traditional Costing

An accounting method that allocates overhead costs to products based on a single, volume-based cost driver, such as direct labor hours.

Direct Labor-Hours

Represents the total hours worked directly on the production of goods.