The Cash Remaining After the Company Has Met Its Operating

question 16

Multiple Choice

The cash remaining after the company has met its operating expenses, payments to creditors, and tax is called:

• A) earnings per share.
• B) capital contributed in excess of par.
• C) residual cash.
• D) dividends.

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Definitions:

Contribution Margin

The selling price per unit, minus the variable cost per unit, used to determine the profitability of products or services.

Fixed Costs

Business expenses that remain constant regardless of the level of goods or services produced.

Fixed Costs

Costs that do not change with the level of production or sales over a certain period, such as rent or salaries.

Profit

The financial gain obtained when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity.