Tra Corporation is analyzing its account balances for 2016.As of the end of 2016, a debit balance of $4,000 remains in the Manufacturing Overhead account.What impact will this have on the financial statements?

Question

Quizplus · Accepted Answer

Manufacturing overhead is a cost incurred during the production process and is therefore included in cost of goods sold. As a result, the debit balance in the Manufacturing Overhead account will decrease gross profit and income by $4,000. It will not have any impact on assets since it represents an expense incurred during the year.

Tra Corporation Is Analyzing Its Account Balances for 2016