Which of the Following Statements Is Not True Regarding Prepaid

question 15

Multiple Choice

Which of the following statements is not true regarding prepaid expenses?

• A)Prepaid expenses represent assets.
• B)Prepaid expenses are shown in a special section of the income statement.
• C)Prepaid expenses become expenses only as goods or services are used up.
• D)Prepaid expenses appear in the balance sheet.

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Definitions:

Predetermined Overhead Rate

A rate used to assign manufacturing overhead costs to products or job orders, calculated before the costs are incurred, based on estimated overhead and activity levels.

Machine Hours

A measure of the amount of time a machine is in operation, often used in the calculation of manufacturing costs and overhead allocation.

Job Order Costing System

A job order costing system tracks costs for each individual job or batch of goods produced, assigning specific materials, labor, and overhead costs to each.

Custom Goods

Products that are personalized or made to order according to the specifications provided by the customer.