"Variable Costs Are Relevant and Fixed Costs Are Irrelevant

question 52

Essay

"Variable costs are relevant and fixed costs are irrelevant." Explain why you agree or disagree with this statement.

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Definitions:

Journal

A chronological record of all financial transactions that occur within a business.

Net Income

The amount of earnings remaining for a business after subtracting all costs and expenses from total revenues, also known as net profit.

Income Statement

A financial report that shows a company's revenues, expenses, and profits over a specific period.

Debits and Credits

Accounting terms used to record changes in accounts, where debits are entries on the left side of an account and credits are entries on the right.