The Time Value of Money Concept Recognizes That a Dollar

question 17

Multiple Choice

The time value of money concept recognizes that a dollar today is worth more than a dollar tomorrow.Which of the following is not a factor in causing the present value of cash inflows to diminish over time?

• A) Current expenses.
• B) Earning potential, such as interest.
• C) Risk of uncollectibility.
• D) Inflation reduces future purchasing power.

Apply the high-low method to calculate variable and fixed cost components.

Understand the concept of the relevant range in cost behavior.

Use the contribution margin and contribution margin ratio in decision-making.

Understand and apply CVP analysis for business decision-making.

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Definitions:

Debts

Money owed by one party to another, which is to be repaid according to terms agreed upon by both parties.

Revenue Account

An account that records the income generated from the sale of goods and services.

Debit Balance

An account balance where total debits exceed total credits.

Debit

An accounting entry that increases an asset or expense account, or decreases a liability or equity account, used in double-entry bookkeeping.