Which of the Following Statements Is True

question 51

Multiple Choice

Which of the following statements is true?

• A) The profit of an entity is always represented by an increase in cash.
• B) A withdrawal of cash for private use by the owner is shown in the income statement as an expense.
• C) Equity can be thought of as the owner's claim to the assets of the entity after deducting all liabilities.
• D) Profit can be calculated as net assets at the end of the year less net assets at the beginning of the year less drawings.

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Definitions:

Machine-hours

A measure of production output based on the number of hours machines are operated within a given period.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the standard variable overhead assigned to the production based on the actual activity levels.

Total Variable Overhead Spending Variance

The overall difference between actual and budgeted variable overhead costs based on the changes in the level of activity.

Variable Overhead

Costs that fluctuate with the level of production output, including indirect expenses like power and materials needed for maintenance and operations.