Lotus Company's Actual Overhead Is Greater Than the Applied Overhead

question 51

Multiple Choice

Lotus Company's actual overhead is greater than the applied overhead.This difference is deemed immaterial.The company records this by debiting Overhead account and crediting Cost of Goods Sold account.Which of the following is true of Lotus Company?

• A)The company has correctly recorded the difference.
• B)The company's assets are overstated.
• C)The company should have credited Work in Process account for the difference.
• D)The company's Cost of Goods Sold account is understated.

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