Theoretical Capacity Refers to

question 12

Multiple Choice

Theoretical capacity refers to

• A)the actual activity level at which a business is operating.
• B)the maximum productive output possible for a business.
• C)an output level that allows for normal work stoppages.
• D)the operating capacity that will meet expected sales demand.

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Definitions:

Ledger Accounts

Records within a ledger that show all the financial transactions of a specific account, summarized.

Book of Original Entry

It is the initial record where financial transactions are documented in the accounting system.

Accounts Payable

Debts of a business to creditors arising from the acquisition of goods and services on credit.

Purchases on Account

Transactions where goods are bought and the payment is deferred to a future date, often recorded in accounts payable.