Mock Clinic Uses Client-Visits as Its Measure of Activity

question 208

Multiple Choice

Mock Clinic uses client-visits as its measure of activity. During August, the clinic budgeted for 3,100 client-visits, but its actual level of activity was 3,150 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for August:

Data used in budgeting:
Actual results for August:
-The net operating income in the planning budget for August would be closest to:

• A)$8,404
• B)$17,880
• C)$16,820
• D)$8,678

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Definitions:

Monetary Unit Assumption

An accounting principle that assumes transactions can be recorded in a stable currency that is the most relevant to the company.

Unit Of Measure

A standard quantity used to express an amount of a physical property, financial item, or activity, facilitating comparisons and calculations.

Economic Entity Assumption

An accounting principle that separates the transactions of a business from those of its owners or other businesses.

Cost Principle

The accounting principle that states goods and services should be recorded at their cost at the time of acquisition.