On a Work Sheet, the Debit Columns of the Income

question 70

Multiple Choice

On a work sheet, the Debit columns of the Income Statement and the Balance Sheet both total more than the Credit columns. This represents

• A) an error in the accounting procedures for the period.
• B) a net loss.
• C) a net income.
• D) no gain or loss.

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Definitions:

Variable Costs

Costs that change in proportion to the level of activity or volume of goods produced, including materials, labor, and energy costs.

Fixed Costs

Expenses that do not change with the volume of production or sales, such as rent and salaries.

Net Income

The amount of profit remaining after all operating expenses, taxes, and interest have been deducted from total revenue.

Variable Cost

Charges that directly correlate with the amount of goods produced or the level of output.