The Accrual Method of Accounting Recognizes Revenue When ____,And Recognizes

question 67

Multiple Choice

The accrual method of accounting recognizes revenue when ____,and recognizes expenses when ____.

• A) they are earned;cash is paid
• B) cash is received;they are incurred
• C) they are earned;they are incurred
• D) cash is received;cash is paid

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Definitions:

Total Variable Cost

The sum of expenses that vary directly with the level of production or sales volume.

Variable Costs

Costs that change in proportion to the level of activity or volume of production.

Fixed Costs

Costs that do not vary with the level of output or sales, such as rent, salaries, and insurance payments.

Diminishing Marginal Product

Diminishing marginal product occurs when adding an additional factor of production results in a lower increase in output, embodying the principle of decreasing returns.