A Contra Account Is an Account the Balance of Which

question 160

True/False

A contra account is an account the balance of which is added to the balance of an associated account to show a more proper amount for the item recorded in the associated account.

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Definitions:

Unit Variable Cost

The cost associated with producing one additional unit of product, including materials, labor, and other variable costs.

Fixed Costs

Overheads like rent, salaries, and insurance that stay the same, irrespective of how much is produced or sold.

Break-Even

The point at which total costs equal total revenues, resulting in no net loss or gain for a business.

Variable Cost

Costs that vary directly with the level of production or volume of output.