Each Event in an REA Model Will in Most Cases

question 84

Multiple Choice

Each event in an REA model will in most cases have at least one ________ agent and one ________ agent involved with the event.

• A)internal;resource
• B)external;entity
• C)internal;employee
• D)internal;external

Acknowledge the secondary characteristics of accounting information.

Analyze the importance of representational faithfulness in financial reporting.

Understand the impact of distributions on financial statements.

Evaluate a company's financial flexibility through specific financial statements.

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Definitions:

Contribution Margin

The amount remaining from sales revenue after variable expenses have been deducted, indicating how much revenue is contributing to fixed expenses and net income.

Variable Costing

An accounting method that only considers variable costs (costs that vary with the level of output) when calculating the cost of goods sold and production.

Absorption Costing

An accounting method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a unit of product.

Net Operating Income

Represents the difference between operating revenues and operating expenses.