The Assumed Continuation of a Business Entity in the Absence

question 68

Multiple Choice

The assumed continuation of a business entity in the absence of evidence to the contrary is an example of the accounting concept of

• A) accrual.
• B) consistency.
• C) comparability.
• D) going concern.

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Definitions:

Margin Of Safety Percentage

A financial ratio that measures the difference between actual or projected sales and the break-even point, expressed as a percentage of sales.

Contribution Margin

The amount remaining from sales revenue after variable production costs are deducted, contributing to covering fixed costs and generating profit.

High-Low Method

A technique used in accounting to estimate variable and fixed costs based on the highest and lowest levels of activity.

Mixed Cost

A cost that contains both variable and fixed cost elements, making its total cost vary with changes in activity, but not proportionately.