Suppose That the Costs of Operating a Certain Restaurant Increase

question 25

Multiple Choice

Suppose that the costs of operating a certain restaurant increase by the following amounts: food: 4%, labor: 5%, electricity: 3%, taxes: 2%, repairs and maintenance: 4%. By how much have the costs of operating the restaurant increased?

• A) 18%
• B) Less than 5%.
• C) The modal average of the increases for these five items.
• D) Less than 2%.
• E) More than 18%.

---

Definitions:

Adjusted Trial Balance

A list of all accounts and their balances after adjustments are made for revenues earned, expenses incurred, and depreciation, ensuring the total debits equal the total credits before financial statements are prepared.

Adjusting Entries

are journal entries made at the end of an accounting period to adjust income and expense accounts so that they comply with the accrual concept of accounting.

Adjusting Entries

Entries made in journal accounts to correct any discrepancies and ensure that the revenue and expense recognition principles are followed accurately.

Relevant Financial Information

Financial data that is capable of making a difference in business decisions, being timely and having predictive and confirmatory value.