Compare Net Income (Loss) for the Year to Net Cash

question 58

Essay

Compare net income (loss) for the year to net cash flow from operating activities. Why are these amounts different? Briefly explain.

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Definitions:

Overapplied Overhead

A circumstance where manufacturing overhead costs assigned exceed the real costs incurred for overhead.

Underapplied Overhead

The situation where the allocated manufacturing overhead costs are less than the actual overhead costs incurred, leading to underestimation of product costs.

Job-Order Costing

An accounting method used to track the costs associated with producing a specific job or batch of products.

Manufacturing Overhead

Indirect factory-related costs that are incurred when a product is manufactured, including costs related to utilities, depreciation, and salaries for management.