Since Variances Are Temporary Accounts, How Are They Usually Handled

question 57

Multiple Choice

Since variances are temporary accounts, how are they usually handled?

• A) Closed directly to cost of goods sold at the end of each month.
• B) Closed directly to cost of goods sold at the end of each accounting period.
• C) Closed directly to cost of goods manufactured at the end of each accounting period.
• D) Closed directly to profit and loss account at the end of the year.

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Definitions:

Personally Liable

The legal responsibility of an individual to satisfy debts or obligations from their own assets.

Preincorporation Subscription

An agreement by an investor to purchase stock in a corporation, made before the corporation is legally formed.

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Agreements to purchase stock in a company made after the company has been incorporated.

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Individuals or companies that take the initiative in founding and organizing the business of a corporation, including arranging its incorporation and securing capital.