What Is Thinking on the Margin

question 2

Multiple Choice

What is thinking on the margin?

• A) Making decisions that are of noneconomic importance.
• B) Making choices that are based on historical precedents.
• C) Making choices that ignore the marginal benefits, but not the marginal costs, of some activity.
• D) Making choices by comparing the additional benefits and additional costs from doing a little bit more of some activity.

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Definitions:

Post-Closing Trial Balance

A list of all account balances after the closing entries have been made, ensuring the accuracy of the ledger.

Fees Earned

Revenue recognized by a company for services provided during a specific period, even if not yet received in cash.

Real Account

Permanent accounts in accounting that are not closed at the end of the accounting period, including assets, liabilities, and equity accounts.

Nominal Account

Refers to accounts that track revenues, expenses, gains, and losses; these accounts are closed at the end of each accounting period.