Which One of the Following Adjustments Increases Net Income for the Period

question 46

Multiple Choice

Which one of the following adjustments increases net income for the period?

• A) Recognition of the amount of supplies used.
• B) Recognition of the revenue earned, but not yet received.
• C) Recognition of the wages earned, but not paid to employees.
• D) Recognition of rent costs that had been paid to the landlord in advance.

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Definitions:

Fixed Costs

Expenses that remain constant regardless of the business's production or sales activity, including insurance and lease payments.

Variable Cost

Expenses that vary directly with the production output, including costs of raw materials and direct labor.

Selling Price

The amount of money for which a product or service is sold to customers.

Contribution Margin Ratio

A financial metric that measures how effectively a company can cover its variable costs with revenue, calculated as contribution margin divided by sales revenue.