Which Three of the Following Are Most Likely to Be

question 28

Multiple Choice

Which three of the following are most likely to be costs of financial distress?

• A) Management may give excessive emphasis to short- term liquidity.
• B) More efficient long- term management of the firm
• C) If assets are to be be sold quickly the price may be very low.
• D) Uncertainties in suppliers' minds about dealing with this firm

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Definitions:

Total Costs

The sum of all expenses incurred in the production of goods or services, including fixed and variable costs.

Variable Costs

Costs that vary directly with the level of production or output, for example, materials and labor costs used in manufacturing.

Accounting Profit

The net income of a company calculated by deducting all operational and overhead costs from total revenue, according to generally accepted accounting principles.

Accounting Profit

Accounting profit is the net income for a company calculated by subtracting total expenses from total revenues, according to generally accepted accounting principles.