When Demand Is High and a Resource Is in Short

question 32

True/False

When demand is high and a resource is in short supply, the contribution margin per unit of the resource from its best possible use should exceed that forgone by putting it to the next best use.

Understand the concept and purpose of adjusting entries in the accounting process.

Identify the types of accounts affected by adjusting entries and their impact on financial statements.

Distinguish between prepaid expenses and their adjustment entries.

Recognize accrued expenses and revenues and how they are reported.

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Definitions:

Management's Intent

The intentions or planned actions of a company's management, often related to investments, operations, or financial decisions.

Liquid Securities

Financial instruments and assets that can be quickly converted into cash without significantly affecting their market price.

Debt Securities

Financial instruments representing money borrowed that must be repaid, such as bonds, notes, or bills, typically with periodic interest payments.

Stock Securities

Financial instruments that represent ownership shares in a corporation, giving shareholders a claim to part of the company’s assets and earnings.