An Obligation of a Business That Represents the Claims of Others

question 222

Multiple Choice

An obligation of a business that represents the claims of others against the assets of the business is called a(n)

• A) asset
• B) expense
• C) revenue
• D) equity
• E) liability

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Definitions:

Segmented Income Statement

An income statement that divides data by segment, department, or product line to analyze each segment's financial performance.

Contribution Format

A form of income statement where costs are divided into variable and fixed categories, highlighting the contribution margin of products.

Common Fixed Expenses

Expenses that do not change with the level of production or sales and are shared by multiple products or departments within a company.

Absorption Costing

An accounting method that integrates all components of manufacturing expenses—materials, labor, and every overhead, be it variable or fixed—into the final product cost.