A Transaction Has Been Recorded in the General Journal of Deluty

question 131

Multiple Choice

A transaction has been recorded in the general journal of Deluty Company as follows: Which of the following describes the effect of this transaction on the company's financial statements?

• A)Increases Stockholders' Equity
• B)Increases Liabilities
• C)Decreases Assets
• D)Increases Assets

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Definitions:

Net Operating Income

A company's income after operating expenses have been deducted but before deducting interest expenses and taxes.

Contribution Margin Ratio

The percentage of each sales dollar remaining after variable costs have been deducted, indicating how much of sales revenue is available to cover fixed costs and generate profit.

Target Profit

The desired level of financial gain set by a business for a specific period, guiding pricing strategies and operational decisions.

Monthly Fixed Expense

Expenses that do not change month to month, regardless of business activity, such as rent or salaries.