The Following Information Relates to Next Year's Projected Operating Results

question 178

Multiple Choice

The following information relates to next year's projected operating results of the Children's Division of Grunge Clothing Corporation:
If the Children's Division is eliminated,$170,000 of the above fixed expenses could be avoided.The annual financial advantage (disadvantage) for the company of eliminating this division should be:

• A) ($300,000)
• B) $30,000
• C) ($30,000)
• D) $300,000

---

Definitions:

Accounting Record

Documentation that contains the financial history and transactions of a company.

Shareholders' Equity

The amount of a company's total assets minus its total liabilities, representing the owners' share of the company.

Normal Balance

The side (debit or credit) on which increases to an account are recorded, based on the type of account.

Normal Balances

Refers to the side of an account (debit or credit) where increases in the account are recorded.