Which of the Following Statements Is Not True

question 64

Multiple Choice

Which of the following statements is not true?

• A)Expenses increase shareholders' equity.
• B)Expenses have normal debit balances.
• C)Expenses decrease shareholders' equity.
• D)Expenses are a negative factor in the calculation of profit.

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Definitions:

Cost-plus Pricing

A pricing strategy where the selling price is determined by adding a specific markup to a product's cost.

Return on Investment

A financial metric used to evaluate the efficiency or profitability of an investment, calculated by dividing net profit by the investment's cost.

Markup

A markup on the base cost of goods intended to cover the expenses of operation and ensure a profit margin.

Absorption Costing

This financial documentation style accounts for all costs arising from manufacturing activities, encompassing direct materials, direct labor, and all overhead costs, both variable and fixed, in the product cost calculation.