Ronald Opens His Business by Investing $12,000

question 155

Multiple Choice

Ronald opens his business by investing $12,000. How does this affect the accounting equation?

• A)Increase in Assets; increase in Stockholders' Equity.
• B)Increase in Liabilities; increase in Stockholders' Equity.
• C)Decrease in Assets; increase in Stockholders' Equity.
• D)Increase in Assets; decrease in Stockholders' Equity.

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Definitions:

Average Fixed Cost

The fixed costs of production (those that do not change with the level of output) divided by the quantity of output produced.

Average Total Cost

The cost of producing one unit, calculated by dividing the entire production cost by the quantity of units made.

Average Variable Cost

The variable cost of production (costs that change with the level of output) divided by the number of units produced, showing the variable cost per unit.

Marginal Cost

The extra expense associated with manufacturing an additional unit of a product or service.