Cash Is Often Referred to as a "Non-Earning" Asset

question 117

True/False

Cash is often referred to as a "non-earning" asset. Thus, one goal of cash management is to minimize the amount of cash necessary to conduct business.

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Definitions:

Economic Profits

The financial gains that are realized when total revenues exceed total costs, including both explicit and implicit costs.

Accounting Profits

The net earnings of a company as calculated by subtracting all explicit costs from total revenues, according to standard accounting practices.

Fixed Costs

Costs that do not vary with the level of output or production, such as rent or salaries.

ATC

Average total cost is found by dividing the overall production cost by the number of units produced.