On September 1, Banger Bros

question 25

Multiple Choice

On September 1, Banger Bros. Company paid $9,000 for one year of rent, in advance. Which of the following accounts and amounts will appear on an adjusted trial balance prepared on December 31?

• A)Prepaid Rent, $9,000
• B)Prepaid Rent, $3,000
• C)Rent Expense, $6,000
• D)Rent Expense, $3,000

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Definitions:

Contribution Margin Ratio

The proportion of sales revenue that exceeds variable costs, typically expressed as a percentage, indicating how much contributes to covering fixed costs and generating profits.

Fixed Expenses

Costs that do not vary with the level of production or sales over a short period, such as rent, salaries, and insurance.

Break-Even

The point at which total costs and total revenues are equal, meaning there is no net loss or gain.

Absorption Costing

A costing method that includes all manufacturing costs—direct materials, direct labor, and both variable and fixed manufacturing overhead—in the cost of a product.