The Percentage of Net Income That Is Added to Retained

question 267

Multiple Choice

The percentage of net income that is added to retained earnings is called the:

• A) Payout ratio.
• B) Profit margin.
• C) Retention ratio.
• D) Internal growth rate.
• E) Intensity ratio.

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Definitions:

Traditional Costing

An accounting method that allocates overhead costs to products based on a predetermined rate, often using direct labor hours or machine hours as the base.

Activity-Based Costing

A costing technique that assigns costs to products or services based on the activities and resources that contribute to the production or delivery.

Activity Rate

In cost accounting, it refers to the cost driver rate used in activity-based costing to allocate overhead costs to products or services based on their consumption of activities.

General Factory

Typically refers to a manufacturing site where various goods are produced through a combination of human labor, machines, and processes.