Multiple Choice
Which of the following best describes the weighted average contribution margin in relation to net sales?
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4. Merchandising Operations
Net Sales
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Decreases in equity from costs of providing products or services to customers are called:
A
Revenues
B
Dividends
C
Expenses
D
Assets
Verified step by step guidance1
Understand the concept of equity: Equity represents the residual interest in the assets of an entity after deducting liabilities.
Recognize that decreases in equity occur when the company incurs costs related to its operations, such as providing products or services to customers.
Learn the definition of expenses: Expenses are the costs incurred by a business in the process of earning revenue, such as salaries, rent, utilities, and cost of goods sold.
Differentiate expenses from other terms: Revenues increase equity, dividends are distributions to shareholders, and assets are resources owned by the company.
Conclude that decreases in equity from costs of providing products or services to customers are classified as expenses.
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