Adam Zarand Wants to Help His Company Decide Whether or Not

question 35

Multiple Choice

Adam Zarand wants to help his company decide whether or not to shut down an unproductive plant.Which type of accounting will he MOST LIKELY use?

• A) managerial
• B) tax
• C) government
• D) financial

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Definitions:

Accounting Basis

The method by which revenues and expenses are recorded and recognized in financial statements, such as cash basis or accrual basis.

Rate of Return

The profit or deficit incurred on an investment during a designated time, shown as a fraction of the initial investment amount.

Net Income

The profit of a company after all expenses and taxes have been deducted from revenue.

Accounting Break-even

The point at which total revenues exactly equal total explicit costs, leading to neither a profit nor a loss.