Sales Discounts and Sales Returns and Allowances Are Contra Revenue

question 23

True/False

Sales Discounts and Sales Returns and Allowances are contra revenue accounts that are debited to close the accounts during the closing process.

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Definitions:

Average Variable Cost

The cost per unit of varying inputs in the production process, calculated by dividing total variable costs by the quantity of output produced.

Economic Profits

Profits calculated by subtracting total explicit and implicit costs from total revenues; measures the excess over both the opportunity cost of capital and the wages that business owners could have earned elsewhere.

Marginal Cost

The escalation in total expenses incurred from the production of an additional unit of a product or service.

Marginal Costs

The change in total cost that comes from making or producing one additional item.