Accompanying the Bank Statement Was a Debit Memorandum for Bank

question 37

Multiple Choice

Accompanying the bank statement was a debit memorandum for bank service charges.What adjustment is required in the depositor's accounts?

• A) Increase Miscellaneous Expense; decrease Cash
• B) Increase Cash; increase Other Income
• C) Increase Cash; increase Accounts Payable
• D) Decrease Accounts Payable; decrease Cash

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Definitions:

Operating Leverage Factor

A measure indicating how a company's fixed costs relate to its variable costs, impacting profitability as sales levels change.

Contribution Margin

The contribution margin is the amount by which the sales revenue of a product or service exceeds its variable costs, indicating how much contributes to covering fixed costs and generating profit.

Selling Price

The amount of money customers pay for a product or service.

CVP Model Assumptions

Assumptions underlying the Cost-Volume-Profit analysis, including constant unit selling prices, variable costs per unit, and total fixed costs.