1. Which of the following is true if a firm has only variable expenses?

a) A 10% increase in sales will lead to no change in expenses and no change in profits

b) A 10% increase in sales will lead to no change in expenses and 10% increase in profits

c) A 10% increase in sales will lead to 10% increase in expenses and 10% change in profits

d) A 10% increase in sales will lead to 10 % change in expenses and no change in profits

2. When recording accounting transactions, revenue and expenses will ultimately be recorded in ________ on the balance sheet

a) Revenue

b)Expenses

c) Assets

d) Liabilities

e) Equity