Multiple Choice Answers

A current asset account must be debited for revenue expenditures since they only benefit the current period.

True
False

A summary of the materials requisitions completed during a period serves as the basis for transferring the cost of the materials from the materials account to:

a. work in process and cost of goods sold
b. work in process and factory overhead
c. finished goods and cost of goods sold
d. work in process and finished goods

If the amount of factory overhead cost incurred exceeds the amount applied, the factory overhead account will have a:

a. positive balance and be underapplied
b. positive balance and be overabsorbed
c. negative balance and be overapplied
d. positive balance and be overapplied

Cash dividends become a liability to a corporation on the date of record.

True
False

Factors which reflect the ability of a business to pay its debts and earn a reasonable amount of income are referred to as solvency and profitability.

True
False