Question

If a balance exists in the temporary MOH account at the end of the​ period, it can be ignored for purposes of preparing the​ company’s financial statements.
A) True
B) False

Answer 1

Answer:

FALSE

Explanation:

If a balance exists in the temporary Manufacturing Overhead account at the end of the​ period, it cannot be ignored for purposes of preparing the​ company’s financial statements.

The balance in the manufacturing overhead account must be included in the cost of sales which is a line item in the income statement of the company. If the balance that exists in the manufacturing overhead account is ignored in the financial statements, it means that the income statement for that period of reporting has been misstated; also the overheads figure not being adequately captured will misstate the expenses and (by extension) Income figures for the period.