Describe the Three Basic Rules That Apply to the REA

question 18

Essay

Describe the three basic rules that apply to the REA model pattern.

---

Definitions:

EBITDA

Earnings Before Interest, Taxes, Depreciation, and Amortization, a measure used to evaluate a company's profitability without the effects of financing and accounting decisions.

Contribution Margin

The amount remaining from sales revenue after variable expenses have been deducted, indicating how much revenue contributes to fixed expenses and profit.

Internal Decision-making

The process within an organization to choose actions among several alternatives based on policies, procedures, or the managerial judgment.

Contribution Margin

The difference between sales revenue and variable costs, representing the portion of sales that helps cover fixed costs.