Applying a New Accounting Policy to Transactions,other Events or Conditions

question 25

Multiple Choice

Applying a new accounting policy to transactions,other events or conditions as if that policy had always been applied is known as:

• A)consequent application
• B)retrospective application
• C)prospective application
• D)subsequent application

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Definitions:

Break-even Point

The financial point at which total costs and total sales are equal, resulting in no net loss or gain for the business.

Variable Costs

These are costs that vary directly with the level of production or sales volume.

Budgeted Net Income

The estimated amount of money expected to be earned over a specific period after all expenses are subtracted.

Variable Costs

Costs that change in proportion to the level of production or business activity.