Author Question: Which of the following is true concerning the trial balance? a. If the trial balance equals then ... (Read 70 times)

fagboi · **on:** Jul 6, 2018

Which of the following is true concerning the trial balance?
a. If the trial balance equals then there are no errors in the recording of journal entries.
b. A trial balance should be prepared before posting.
c. The trial balance only lists the names of the accounts, not the balances.
d. The trial balance proves only that the total ledger debit balances equal the total ledger credit balances.

Question 2

Identifying variable-, fixed-, and mixed-cost functions.

The Pacific Corporation operates car rental agencies at more than 20 airports. Customers can choose from one of three contracts for car rentals of one day or less:

- Contract 1: 50 for the day
- Contract 2: 30 for the day plus 0.20 per mile traveled
- Contract 3: 1 per mile traveled

Required:
1. Plot separate graphs for each of the three contracts, with costs on the vertical axis and miles traveled on the horizontal axis.
2. Express each contract as a linear cost function of the form y = a + bX.
3. Identify each contract as a variable-, fixed-, or mixed-cost function.

jaykayy05 · **Reply #1 on:** Jul 6, 2018

Answer to Question 1

d

Answer to Question 2

1. See Solution Exhibit 10- 17.

2. Contract 1: y = 50
Contract 2: y = 30 + 0.20X
Contract 3: y = 1X

where X is the number of miles traveled in the day.

3.
Contract Cost Function
1
2
3 Fixed
Mixed
Variable

EXHIBIT 10- 17
Plots of Car Rental Contracts Offered by Pacific Corp.