A Short-Term Creditor Is Primarily Interested in the __________ of the Borrower

question 133

Multiple Choice

A short-term creditor is primarily interested in the __________ of the borrower.

• A)liquidity
• B)profitability
• C)consistency
• D)solvency

Analyze the impact of operating expenses on profitability.

Develop competency in preparing components of a master budget including sales, production, direct materials, direct labor, and overhead.

Appreciate the importance of effective cash management in operations.

Estimate financial outcomes such as net income, retained earnings, and cash disbursements.

---

Definitions:

Inventory Accounts

Accounts used to track the cost of goods a company has in stock during an accounting period, including raw materials, work in progress, and finished goods.

Actual Overhead Costs

The real costs that a company incurs for its indirect materials, indirect labor, and other overhead expenses.

Direct Labour Cost

The wages and benefits paid to workers who are directly involved in the manufacturing process.

Manufacturing Overhead Applied

The allocation of overhead costs to the goods produced, based on a predetermined overhead rate.