Unit 6 Assessment

Expenses that are not affected by the

number of products a business sells are called

• variable expenses

• fixed expenses

• contribution margin

• selling expenses

Expenses that change based on the quantity of goods a business sells

• fixed expenses

• variable expenses

• fluctuating expenses

• selling expenses

Which of the following is not used in determining the contribution margin?

• variable expenses

• fixed expenses

• cost of goods sold

• other variable expenses

in a service business, an entrepreneur charges $500 for a job, pays a commission of 10% of sales, and has a cost of services sold per unit of $100. What is the entrepreneur’s contribution margin per unit?

• $350

• $300

• $395

• $400

In an income statement, subtracting the cost of goods sold from the net sales provides the

• revenue

• net operating income

• gross profit

• net income

The cash flow equation is

• cash Outflow – cash inflow = net Profit

• cash Outflow – cash inflow = Gross Profit

• cash inflow – cash Outflow = net cash

• cash inflow – cash Outflow = net Profit

Owner’s equity is calculated by

• subtracting total liabilities from total assets

• dividing total liabilities by total assets

• subtracting total assets from total liabilities

• dividing total assets by total liabilities

Return on sales (ROs) is also called

• net profit ratio

• net margin

• profit margin

• all of the above

A cost of goods sold section is included in a

• retail business income statement

• service business income statement

• cash flow statement

• balance sheet

Total liabilities divided by total assets is the formula used to calculate the

• debt ratio

• current ratio

• quick ratio

• debt-to-equity ratio