Double-Entry Bookkeeping Is a System of Accounting in Which

question 78

Multiple Choice

Double-entry bookkeeping is a system of accounting in which:

• A)it is ideal for credits to be greater than debits.
• B)it is ideal for debits to be greater than credits.
• C)each transaction is recorded in the same account twice.
• D)only foreign and domestic accounts are used.
• E)the debit total must equal the credit total for the transactions as a whole.

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Definitions:

Net Operating Income

A company's income after operating expenses have been deducted but before deducting interest expenses and taxes.

Contribution Margin Ratio

The percentage of each sales dollar remaining after variable costs have been deducted, indicating how much of sales revenue is available to cover fixed costs and generate profit.

Target Profit

The desired level of financial gain set by a business for a specific period, guiding pricing strategies and operational decisions.

Monthly Fixed Expense

Expenses that do not change month to month, regardless of business activity, such as rent or salaries.