Which of the Following Statements Is True

question 27

Multiple Choice

Which of the following statements is true?

• A)In real life, the curvilinear nature of variable costs is questionable.
• B)In real life, fixed costs are fixed in total and do not change at various activity levels.
• C)Within the relevant range, there is rarely a straight-line relationship for both variable and fixed costs.
• D)Within the relevant range the linear assumption is valid and useful for cost behaviour analysis.

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Definitions:

Contributed Capital

The total value of money and other resources that shareholders have contributed to the company in exchange for shares of stock.

Faithful Representation

Requires that the information be complete, neutral, and free from error.

Prepaid Insurance Expense

A current asset account that represents prepayments for insurance coverage, which will be expensed over time as the insurance coverage expires.