Table 3-37 ​

question 264

Multiple Choice

Table 3-37 ​
-Refer to Table 3-37. Sarah and Charles are both potters and each can switch between the production of vases and mugs at a constant rate. The table shows the total number of vases or decorative mugs that each person can produce in a six-hour session of producing pottery. Sarah and Charles could benefit from trading with each other if they traded at a price of

• A)​5 vases per mug
• B)​0.5 mugs per vase
• C)​3 mugs per vase
• D)​1.5 vases per mug

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Definitions:

Year-End Closing Entries

Journal entries made at the end of an accounting period to prepare the accounts for the next period by clearing out revenues and expenses to the income summary.

Owner's Drawings

The withdrawal of business assets by the owner for personal use, which reduces the equity of the owner in the business.

Gross Profit

The difference between revenue and the cost of goods sold before accounting for certain expenses.

Operating Expenses

Regular costs associated with operating a business, such as rent, utilities, and payroll.