A Company Has Three Product Lines, One of Which Reflects

question 96

Multiple Choice

A company has three product lines, one of which reflects the following results: If this product line is eliminated, 60% of the fixed expenses can be eliminated and the other 40% will be allocated to other product lines. If management decides to eliminate this product line, the company's net income will

• A) increase by $40,000.
• B) decrease by $90,000.
• C) decrease by $12,000.
• D) increase by $12,000.

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Definitions:

QuickBooks

Accounting software developed by Intuit, widely used by small and medium-sized businesses for finance management.

QuickBooks Transactions

Financial operations such as sales, purchases, and payments recorded and tracked within QuickBooks software.

Non-posting Accounts

Non-posting accounts are accounts used in an accounting system that are not directly affected or updated into the general ledger, often used for tracking purposes only.

Balance Sheet

A financial statement that provides a snapshot of a company's financial condition at a specific moment in time by detailing assets, liabilities, and equity.