If the Balance Sheet and Statement of Retained Earnings Columns

question 319

Multiple Choice

If the Balance Sheet and Statement of Retained Earnings columns of a work sheet fail to balance when the net income is added to the Balance Sheet and Statement of Retained Earnings Credit column,the cause could be:

• A)An expense entered in the Balance Sheet and Statement of Retained Earnings Debit column.
• B)A revenue entered in the Balance Sheet and Statement of Retained Earnings Credit column.
• C)An asset amount entered in the Income Statement and Statement of Retained Earnings Debit column.
• D)A liability amount entered in the Income Statement and Statement of Retained Earnings Credit column.
• E)An expense entered in the Balance Sheet and Statement of Retained Earnings Credit column.

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Definitions:

Fixed Expenses

Expenses that remain constant regardless of the amount of output or sales, including rent, salaries, and insurance costs.

Monthly Net Operating Income

The profit a company generates from its normal business operations, excluding unusual or infrequent items, on a monthly basis.

Margin of Safety

Margin of Safety is the difference between actual or expected sales and the break-even point, expressed in terms of units, dollars, or percentage, indicating how much sales can fall before a business incurs a loss.

Contribution Margin Ratio

A financial metric that measures how much of a company's revenue is available to cover its variable costs and contribute to its fixed costs and profits.