Which of the Following Liabilities Is Often Referred to as "Free

question 46

Multiple Choice

Which of the following liabilities is often referred to as "free debt" because it rarely carries any interest if paid within a specified period of time.

• A)Line of credit.
• B)Working capital loan.
• C)Accounts payable.
• D)None of the above-all current liabilities carry an interest rate.

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Definitions:

Product Cost

The total expense incurred to produce and make ready for sale a product, including direct materials, labor, and overhead costs.

Opportunity Cost

The cost of foregoing the next best alternative when making a decision.

Total Expected Cost

A projection of the total costs associated with a project or business activity, including both fixed and variable costs.

Variable Costs

Costs that vary depending on the amount of production or business operations.