ABSORPTION Definition

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ABSORPTION see ABSORB.

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PROPRIETARY THEORY is where no fundamental distinction is drawn between a legal entity and its owners, i.e. the entity does not exist separately from the owners for accounting purposes. The primary focus is to report information useful to the owners, and therefore the financial statements are prepared from their perspective. See ENTITY THEORY.

MARGINAL REVENUE is the change in total revenue as a result of producing one additional unit of output.

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