Which of the Following Would Eventually Cause Retained Earnings to Decrease

question 15

Multiple Choice

Which of the following would eventually cause Retained Earnings to decrease?

• A) Receiving contributions from investors
• B) Earning unearned revenue
• C) Billing customers for services provided
• D) Using up supplies

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Definitions:

Absorption Costing

An accounting method that includes all manufacturing costs, both fixed and variable, in the cost of a product.

Contribution Margin Ratio

A financial metric that measures the proportion of revenue that exceeds variable costs, indicating how much revenue contributes to covering fixed costs and generating profit.

Sales

The total amount of revenue generated by the selling of goods or services related to a company's primary operations.

Routine Pricing

A method where prices are set based on standard costs plus a fixed profit margin, commonly used in consistent market conditions.