Positive Accounting Research Attempts to Explain Behavioral Relationships in Accounting

question 9

True/False

Positive accounting research attempts to explain behavioral relationships in accounting.

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Definitions:

DOL

Degree of Operating Leverage; a measure of a company's fixed costs as a percentage of its total costs, indicating how earnings before interest and taxes (EBIT) change in response to a change in sales volume.

Contribution Margin

The amount of revenue remaining after deducting variable costs, used to cover fixed costs and generate profit.

Variable Cost

Expenses that vary depending on the amount of products or services a company generates.

Contribution

The amount of money or resources that an individual or entity provides towards a particular project, investment, or cause.