The Balance Sheet Depicts Which of the Following Equations

question 81

Multiple Choice

The balance sheet depicts which of the following equations?

• A)Net income = revenue − expenses.
• B)Ending retained earnings = beginning retained earnings + net income − dividends.
• C)Assets = liabilities + stockholders' equity.
• D)Net cash flows = total cash inflows − total cash outflows.

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Definitions:

Fixed Costs

Expenses that do not change in response to the level of goods or services produced by the business, such as rent, salaries, and insurance.

Composite Unit

A measurement or quantity combining two or more units to represent a product or system's multiple aspects.

Contribution Margin

The difference between the sales revenue and variable costs of a product, indicating how much contributes to covering fixed costs and earning profit.

Contribution Margin

The residual amount from sales income following the deduction of variable expenses, allocated for covering fixed costs and producing profit.