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

Introduction to Adjusting Journal Entries and Prepaid Expenses

Financial Accounting

3. Accrual Accounting Concepts

Introduction to Adjusting Journal Entries and Prepaid Expenses

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Multiple Choice

The overhead variance is the difference between:

Budgeted overhead and actual direct materials used

Actual overhead incurred and overhead applied to production

Estimated overhead and actual sales revenue

Standard cost and actual cost of direct labor

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Verified step by step guidance

Understand the concept of overhead variance: Overhead variance is the difference between the actual overhead incurred and the overhead applied to production. It helps assess how well a company is managing its overhead costs.

Identify the components of overhead variance: The two key components are (1) actual overhead incurred, which represents the real costs incurred during production, and (2) overhead applied to production, which is the estimated overhead allocated to production based on a predetermined rate.

Clarify the incorrect options: Budgeted overhead and actual direct materials used are unrelated to overhead variance. Similarly, estimated overhead and actual sales revenue, as well as standard cost and actual cost of direct labor, do not pertain to overhead variance calculations.

Relate overhead variance to production: Overhead variance is specifically tied to production activities and is calculated to ensure that overhead costs are being applied accurately and efficiently.

Summarize the correct answer: The overhead variance is the difference between actual overhead incurred and overhead applied to production, as this reflects the true variance in overhead costs during the production process.