Which of the Following Accounting Principles Would Require That All

question 106

Multiple Choice

Which of the following accounting principles would require that all goods and services purchased be recorded at cost?

• A) Going-concern assumption.
• B) Matching principle.
• C) Cost principle.
• D) Business entity assumption.
• E) Consideration assumption.

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Definitions:

Contribution Margin Ratio

The percentage of sales revenue that exceeds variable costs, indicating how much revenue contributes to fixed costs and profits.

Fixed Monthly Expenses

Regular expenses that do not fluctuate in amount from month to month, such as mortgage or lease payments.

Net Operating Income

The income derived from a company's primary business activities, not including costs or income from activities not related to its main operations.

Margin Of Safety

The difference between actual or projected sales and the sales level at which the business doesn't incur any loss but doesn't make a profit either.