Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

3. Accrual Accounting Concepts

Adjusting Entries: Supplies

Financial Accounting

3. Accrual Accounting Concepts

Adjusting Entries: Supplies

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Multiple Choice

An unfavorable materials quantity variance indicates that:

materials were purchased at a lower cost than the standard price

less materials were used than the standard allowed for actual production

more materials were used than the standard allowed for actual production

the actual output was higher than the budgeted output

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Verified step by step guidance

Understand the concept of a materials quantity variance: It measures the difference between the actual quantity of materials used and the standard quantity allowed for actual production, multiplied by the standard cost per unit of material.

Recognize that an unfavorable variance occurs when the actual quantity of materials used exceeds the standard quantity allowed for production. This indicates inefficiency or waste in the production process.

Analyze the options provided in the problem: The correct interpretation of an unfavorable materials quantity variance is that more materials were used than the standard allowed for actual production.

Eliminate incorrect options: For example, 'materials were purchased at a lower cost than the standard price' relates to a price variance, not a quantity variance. Similarly, 'less materials were used than the standard allowed' would result in a favorable variance, not an unfavorable one.

Conclude that the correct answer is: 'more materials were used than the standard allowed for actual production,' as this aligns with the definition of an unfavorable materials quantity variance.