If the Total Debits and the Total Credits of a Trial

question 28

Multiple Choice

If the total debits and the total credits of a trial balance are not equal, the error could be due to:

• A) recording the same transaction twice.
• B) recording both the debit and credit of the journal entry for the same incorrect amount.
• C) an error in determining an account balance.
• D) forgetting to record a transaction.

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Definitions:

Cost Structure

The mix of fixed and variable cost used by a firm.

Financial Leverage

Utilizing borrowed funds to amplify the prospective gains of an investment.

Operating Leverage

The degree to which a company uses fixed operating costs, affecting its earnings before interest and taxes (EBIT) with changes in sales.

Breakeven Point

The financial position at which total costs equal total revenues, indicating that there is no net loss or gain.