Deposits Held as Compensating Balances

question 78

Multiple Choice

Deposits held as compensating balances

• A)usually do not earn interest.
• B)if legally restricted and held against short-term credit may be included as cash.
• C)if legally restricted and held against long-term credit may be included among current assets.
• D)none of these.

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Definitions:

Variable Costs

Expenses that fluctuate directly with changes in production volume, such as raw materials and direct labor.

Capacity

The maximum level of output that a company can sustain to make a product or provide a service under normal conditions.

Absorption Costing

A financial recording technique that incorporates all costs associated with manufacturing (such as direct materials, direct labor, along with variable and fixed overhead expenses) into the product's cost.

Variable Costing

An accounting method that includes only variable costs - costs that change with production levels - in product costs.