The System of Accounting Where Revenues Are Recorded When They

question 145

True/False

The system of accounting where revenues are recorded when they are earned and expenses are recorded when they are incurred is called the cash basis of accounting.

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Definitions:

Opportunity Cost

The cost of missing out on the second-best option while choosing between two mutually exclusive options in a decision-making process.

Profit

The financial gain realized when the revenue generated from business activities exceeds the expenses, costs, and taxes needed to sustain the activity.

Average Total Cost

The complete expense of manufacturing (encompassing both fixed and variable expenditures) divided by the overall amount of goods produced.

Output

The quantity of goods or services produced by a firm, industry, or economy within a certain period.