A Firm with $600,000 of Fixed Costs and $200,000 of Depreciation

question 21

Multiple Choice

A firm with $600,000 of fixed costs and $200,000 of depreciation is expected to produce $225,000 in profits. What is its DOL?

• A) 3.56
• B) 3.67
• C) 4.56
• D)4.67

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Definitions:

Cash Receipts Journal

A specialized accounting journal used to record all cash inflows or receipts of a business.

Accounts Payable Subsidiary Ledger

A detailed ledger containing all individual creditor accounts, which supports the total balance reported in the company's general ledger account for accounts payable.

Cash Payment Posting

The process of recording cash payments in the accounting records, affecting the balance of cash accounts.

Cash Payments Journal

A financial journal used in accounting to record all cash payments made by a company, including expenses and debt payments.