Adding the Contribution Margin as a Component to Cost-Volume-Profit Computations

question 88

True/False

Adding the contribution margin as a component to cost-volume-profit computations will not change the resulting amount of breakeven units in a given situation.

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Definitions:

Double-Entry Accounting

A bookkeeping system that records each transaction in two accounts, ensuring that the accounting equation (Assets = Liabilities + Equity) remains balanced.

Transaction Recorded Twice

This refers to a bookkeeping error where a financial transaction is mistakenly entered into an accounting system more than once, potentially distorting financial statements.

Liabilities

Debts or financial responsibilities that a company has towards others, requiring settlement via the transfer of economic resources over a period.

Debits

Entries in accounting that represent an increase in assets or expenses, or a decrease in liabilities, equity, or income.