Which of the Following Statements Is Correct

question 41

Multiple Choice

Which of the following statements is correct?

• A)Expense accounts result in decreases in net income and stockholders' equity and therefore have credit balances.
• B)Revenue accounts result in increases in net income and stockholders' equity and therefore have debit balances.
• C)Loss accounts result in decreases in net income and stockholders' equity and therefore have debit balances.
• D)Gain accounts result in increases in net income and stockholders' equity and therefore have debit balances.

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Definitions:

Long-Run Average Cost Curve

A graphical representation showing the minimum average cost of producing any given level of output when all inputs, including capital, are variable.

Short-Run Average Cost Curve

A graphical representation that shows how the average cost of production changes with varying output levels in the short term.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, leading to a decreased cost per unit.

Long-Run Cost

The cost of production when all inputs, including both fixed and variable factors, can be fully adjusted, often leading to economies of scale.