Prior to Recording Adjusting Entries at the End of an Accounting

question 113

True/False

Prior to recording adjusting entries at the end of an accounting period, some accounts may not show correct balances even though all business transactions were properly recorded.

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Definitions:

Fixed Manufacturing Overhead

The consistent, indirect costs associated with manufacturing that do not vary with the level of production, such as rent, insurance, and salaries of permanent staff.

Variable Costing

A costing method that includes only variable production costs (direct materials, direct labor, and variable overhead) in product costs, excluding fixed overhead.

Absorption Costing

A method of product costing that incorporates all manufacturing costs, including both fixed and variable costs, in the price of a product.

Variable Costing

An accounting method that charges only variable costs to cost of goods sold and reports fixed costs separately as period costs.