Which of the Following Is Not an Underlying Assumption of CVP

question 102

Multiple Choice

Which of the following is not an underlying assumption of CVP analysis?

• A) Changes in activity are the only factors that affect costs.
• B) Cost classifications are reasonably accurate.
• C) Beginning inventory is larger than ending inventory.
• D) Sales mix is constant.

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Definitions:

Investing Activities

Transactions involving the purchase or sale of long-term assets and investments not included in cash equivalents.

Financing Activities

Transactions involving long-term liabilities and equity, including issuing debt, repurchasing shares, and paying dividends, as part of a company's fund-raising activities.

Not Affecting Cash

Transactions or events that do not result in actual cash flow in or out of a company but may still impact the financial statements.

Payments to Suppliers

Amounts of money paid by a company to its suppliers for goods or services received.