When Preparing the Financial Statements

question 76

Multiple Choice

When preparing the financial statements:

• A) the balance sheet lists the balance of the asset accounts at the end of the period.
• B) retained earnings is included in common stock.
• C) data for the statement of cash flows can be found under the retained earnings account.
• D) data for the income statement is found under the Cash account.

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Definitions:

Marginal Product

The growth in productivity that occurs when an extra unit of input is added, with all other inputs remaining the same.

Profit

The financial benefit realized when revenue generated from business activities exceeds the expenses, costs, and taxes needed to sustain the operation.

Total Output

The total amount of goods and services produced within an economy at a given overall price level in a given time period.

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, as the scale of the operation and output increases.