The Purpose of This Item Is to Maintain the Detailed

question 94

Multiple Choice

The purpose of this item is to maintain the detailed information regarding routine transactions, with an account established for each entity.

• A)Purchases Journal
• B)Subsidiary Ledger
• C)General Journal
• D)General Ledger

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Definitions:

Variable Expenses

Expenses that vary directly with the amount of activity or production volume.

Fixed Expenses

Expenses that do not change with the level of production or sales, remaining constant regardless of business activity levels.

Degree Of Operating Leverage

A ratio that measures a company's fixed costs as a proportion of its total costs, indicating how a change in sales will affect its operating income.

Contribution Format

A type of income statement where costs are separated into variable and fixed categories, highlighting the contribution margin.