If Total Credits Exceed Total Debits in the Balance Sheet

question 26

Multiple Choice

If total credits exceed total debits in the Balance Sheet columns of a work sheet,

• A) a mistake has been made.
• B) a net income has occurred.
• C) assets exceed liabilities.
• D) no conclusion can be drawn until the closing entries have been made.
• E) a net loss has occurred.

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Definitions:

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including both materials and labor costs.

Raw Material

Basic materials or substances used in the manufacturing or production process to create goods and products.

Work in Process

Inventory that includes all the materials, labor, and overhead costs for products that are in the production process but not yet completed.

Property, Plant, and Equipment

Tangible long-term assets used in the operation of a business, such as buildings, machinery, and equipment.