The First Step in Recording a Transaction in the General

question 78

Multiple Choice

The first step in recording a transaction in the general journal is to record the:

• A)explanation of the entry.
• B)account(s)to be credited and the amount(s).
• C)date of the entry.
• D)account(s)to be debited and the amount(s).

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Definitions:

Variable Cost

Costs that change in proportion to the level of production or business activity, such as materials, labor, and utility costs.

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent, salary, or insurance, providing stability to a company's expense structure.

Margin of Safety

The difference between actual or projected sales and the break-even point, often expressed as a percentage.

Contribution Margin Ratio

A financial metric showing the percentage of revenue that exceeds total variable costs, indicating how much revenue contributes to fixed costs and profit.