If Pretax Profits Decrease by 13

question 2

Multiple Choice

If pretax profits decrease by 13.8% when the DOL is 3.8,then the decrease in sales is:

• A) 0.28%
• B) 2.75%
• C) 3.63%
• D) 10.00%

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Definitions:

Net Income

The total profit of a company after all expenses, taxes, and costs have been subtracted from total revenues.

Sales

The total amount of revenue generated from goods or services sold by a business.

Adjusting Entries

Adjusting entries are journal entries made in accounting at the end of an accounting period to update the accounts and ensure they reflect the true financial position of the business.

Useful Life

The estimated period over which a tangible or intangible asset is expected to be functional and economic for its intended purpose.