Inventory Is Less Liquid Than

question 17

Multiple Choice

Inventory is less liquid than:

• A) accounts receivable.
• B) land.
• C) plant and equipment.
• D) patents.

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Definitions:

Variable Cost

Expenditures that are directly correlated with the volume of production or output level.

Manufacturing Overhead

All manufacturing costs that are not direct materials or direct labor, including expenses related to running the factory.

Operating Leverage

A measure of how revenue growth translates into growth in operating income. It is an indicator of the fixed versus variable costs in a company's operation.

Fixed Costs

Expenses that do not change with the level of output or sales within a certain range and period.