Which Statement Regarding Committed and Discretionary Fixed Costs Is True

question 13

Multiple Choice

Which statement regarding committed and discretionary fixed costs is true?

• A)Discretionary fixed costs preserve management's flexibility.
• B)Committed fixed costs preserve management's flexibility.
• C)Both discretionary and committed fixed costs preserve flexibility.
• D)Both discretionary and committed fixed costs limit flexibility.

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Definitions:

Accounts Payable

Liabilities to creditors that must be paid within a short period, usually less than a year.

Operating Activities

Activities that constitute the primary or main activities of an organization, including production, sales, and delivery of services.

Cash Dividend

A cash distribution given to shareholders from the company's earnings.

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and stockholders' equity at a specific point in time.