An Example of a Marginal Decision Is Deciding Whether To

question 177

Multiple Choice

An example of a marginal decision is deciding whether to:

• A) invest half your savings in Google or Microsoft.
• B) buy one more apple or one more banana.
• C) commit your life to economics or biology.
• D) study for 5 hours or for 10 hours.

Calculate budget variances and interpret their significance.

Apportion costs based on activity bases.

Determine divisional income from operations.

Calculate and analyze transfer prices between divisions.

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Definitions:

Liability

Debts or monetary commitments that a firm has to settle with others, requiring the provision of economic benefits such as cash, products, or services over a period.

Expense

Costs incurred by a business in the process of earning revenue, typically categorized as fixed, variable, or periodic.

Accrual

Accrual is an accounting method where revenue and expenses are recorded when they are earned or incurred, regardless of when cash transactions occur.

Balance Sheet

A document showcasing a business's assets, liabilities, and owner's equity at a certain point in time.