Expenses Paid in Advance Such as Rent and Insurance Are

question 29

Short Answer

Expenses paid in advance such as rent and insurance are classified as prepaid expenses. Into what category are they placed?

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Definitions:

Contribution Margin

The amount remaining from sales revenue after variable expenses have been deducted.

Variable Cost

A cost that changes in proportion to the level of activity or volume of production in a business.

Gross Margin

The difference between sales revenue and the cost of goods sold, expressed as a percentage of sales.

Absorption Costing

A method of inventory costing that includes all manufacturing costs, both variable and fixed, in the cost of a product.