Question

Which of the following is an example of a factory overhead cost?

a. insurance premiums on salespersons' automobiles

b. presidents salary

c. repair and maintenance cost on the administrative buildings

d. factory heating and lighting cost

2. Which of the best expresses the accounting equation

a. assets=liabilities-owner's equity

b. assets= owner's equity-Liabilities

c. Liabilities= Owner's Equity- assets

d. Current Assets= Long-term Assets + current liabilities + long-term Liabilities + owners equity

e. Owners equity = Assets- liabilities

Answer 1

Answer:

Overheads are those cost that is not directly attributable to the material produced & hence allocated on any rational basis such as machine hours rate, Number of employees basis, etc.

Cost related to insurance premiums on salespersons, automobiles, repair, and maintenance costs on the administrative buildings & president salary are not overhead.

Factory heating and lighting cost are overhead which need to be allocated on any rational basis & accordingly Option (d) is the correct answer.

2.

Accounting equation can be expressed as follows;

Assets = Equity + Laibilities or,

Liabilities = Assets -Equity or,

Equity = Assets - Laibilities,

Accordingly, Option (e) is the correct answer as Owners equity = Assets- liabilities.