The Area of Accounting That Provides Managers Inside the Organization

question 37

Multiple Choice

The area of accounting that provides managers inside the organization with information they need to make decisions is called:

• A)Tax accounting.
• B)Managerial accounting.
• C)Informational accounting.
• D)Financial accounting.

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Definitions:

Fixed Monthly Expenses

Regular expenses that do not vary in amount from month to month, such as rent and salaries.

Net Operating Income

A measure of a company's profitability from its regular, core business operations, excluding deductions of interest and taxes.

Contribution Margin Ratio

The percentage of each sale that remains after variable costs are deducted, indicating how much revenue is contributing to fixed costs and profit.

Operating Leverage

A measure of how sensitive a company's operating income is to a change in sales, reflecting the proportion of fixed costs in the company's cost structure.