If the Liabilities of a Company Increased $74,000 During a Period

question 69

Multiple Choice

If the liabilities of a company increased $74,000 during a period of time and equity in the company decreased $19,000 during the same period, what was the effect on the assets?

• A) Assets would have increased $55,000.
• B) Assets would have decreased $55,000.
• C) Assets would have increased $19,000.
• D) Assets would have decreased $19,000.
• E) None of these.

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Definitions:

Abnormal Spoilage Costs

Abnormal spoilage costs are the costs associated with the waste or loss of materials, labor, or overheads that occur due to unforeseen circumstances or inefficiencies beyond standard production spoilage rates.

Control Quality

The process of ensuring that a product or service meets a certain set of criteria or standards before it is completed or delivered.

Normal Spoilage

The expected amount of waste or loss of materials during the production process, considered a standard cost in manufacturing.

Unit Cost

The calculated cost to produce one unit of a product, taking into account all relevant costs of production.