Barkatorium Pet Supplies Recently Hired an Accountant to Make Sense

question 296

True/False

Barkatorium Pet Supplies recently hired an accountant to make sense of each day's transactions, and keep better financial records for the business. The accountant showed the owner that the ledger in a computerized accounting system would automatically take entries and post them to the correct accounts in the ledger, making the bookkeeping tasks much easier.

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Definitions:

Pretax Income

The amount of income earned by a business before taxes are deducted.

Fixed Costs

Expenses that do not change with changes in the volume of production or sales, such as rent, salaries, and insurance.

Variable Costs

Costs that vary directly with the level of production or sales activity.

Contribution Margin Ratio

A financial metric that shows the portion of sales revenue that is not consumed by variable costs and is available to cover fixed costs.