At the End of the Period

question 123

Multiple Choice

At the end of the period:

• A) All variances are closed to cost of goods sold if they are material
• B) Variances are summed but they need not be recorded
• C) Variances are prorated to inventory and cost of goods sold if they are material
• D) Ignored if they are immaterial

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Definitions:

Indirect Method

A way of calculating cash flows in the cash flow statement, where net income is adjusted for changes in balance sheet accounts to reflect cash transactions.

Voting Stock

Shares of a corporation that give the shareholder the right to vote on matters of corporate policy and on the selection of the board of directors.

Cash Dividend

A disbursement from a corporation to its stockholders, typically coming from its earnings.

Net Income

The ultimate earnings of a company, arrived at by reducing its revenues by all incurred expenses and taxes.