The Financing of Short-Term Assets with Short-Term Debt Is Known

question 71

Multiple Choice

The financing of short-term assets with short-term debt is known as:

• A) Relative cash funding.
• B) Restrictive financing.
• C) Seasonal funding.
• D) Flexible financing.
• E) Maturity hedging.

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Definitions:

Variable Cost Concept

The principle that costs vary in proportion to the level of production or activity. These costs increase as production increases and decrease as production decreases.

Markup Percentage

The amount by which the cost of a product is increased to arrive at the selling price, expressed as a percentage of the cost.

Fixed Costs

Expenses that do not change with the level of goods or services produced by the business over the short term.

Product Cost Concept

The accounting principle that determines the cost of a product by adding the costs of raw materials, labor, and overhead incurred in its production.