Which of the Following Does Not Correctly Describe the Effect

question 109

Multiple Choice

Which of the following does not correctly describe the effect of a credit card discount?

• A)Net sales decrease and gross profit decreases.
• B)Net sales decrease and net income decreases.
• C)Operating expenses remain the same and net income decreases.
• D)Neither operating expenses nor net income is affected

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Definitions:

Break-even Point

The point at which total revenues equal total costs, resulting in neither profit nor loss.

Variable Cost

Costs that vary depending on the amount of goods produced or the scale of operations in a business.

Fixed Costs

Expenses that do not change with the level of goods or services produced by a business within a certain period, such as rent, salaries, and insurance.

High-low Method

A technique used in cost accounting to estimate variable and fixed costs based on the highest and lowest levels of activity.