A Company Adopting the Replaceable Rules Included in the Corporations

question 11

Multiple Choice

A company adopting the replaceable rules included in the Corporations Act announces a dividend to be paid after balance date.The company:

• A) must recognise a liability in its financial statements
• B) must not recognise a liability
• C) has the choice of whether to recognise a liability or not
• D) none of the above

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Definitions:

Fixed Costs

Fixed costs are business expenses that remain constant regardless of the level of production or sales, such as rent, salaries, and insurance premiums.

Total Fixed Costs

Expenses that do not change with the level of production or sales over a short period, including rent, insurance, and salaries.

Activity Level

In cost accounting, this refers to the volume of production or operations, impacting variable costs and potentially influencing budgeting and performance measures.

Contribution Margin

The contribution margin is the difference between sales revenue and variable costs, showing how much revenue contributes to fixed costs and profit.