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As I know understatement is a number which is higher than the correct numbers. and overstatement is a number which is less than the correct numbers
Correct number : 270
Understatement: 278Overstatement: 262
Is that correct ? I’m getting confused whenever i solving asset expenditure and expenses problem i got confused. When a expense correct amount is 600 in question recorded as 520 is that effect in assets understatement or overstatement ?
If a number is entered lower than it should be, then it is understated.
If a number is entered higher than it should be, then it is overstated.So recording 520 when it should be 600 means that at the moment it has been understated.
Wodl Co uses absorption costing and an overhead absorption rate based on machine hours. The following information is available for its Stitching department for February:
Budget Actual
Overhead costs $16,340 $17,230
Number of machine 4,300 4,250
hoursWhich of the following statements about overhead absorption in the Stitching department for February are true?
Overhead costs were over-absorbed by $203
Overhead costs were under-absorbed by $203
Overhead costs were under-absorbed by $1,080
Overhead costs were over-absorbed by $1,080Sir, if actual budget is 1080 higher than it should be why over-absorbed 1080 is wrong
Sorry sir i am huge confused about that even in Finanacial Accounting I’m getting wrong attemp in overstated and understated question in Asset Expenditure and Expenses
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