The Relationship Between Current Liabilities and Current Assets Is

question 75

Multiple Choice

The relationship between current liabilities and current assets is

• A) useful in determining income.
• B) useful in evaluating a company's short-term debt paying ability.
• C) called the matching principle.
• D) useful in determining the amount of a company's long-term debt.

---

Definitions:

Minimum Efficient Scale

The smallest amount of production a company can achieve while still taking full advantage of economies of scale with regards to minimizing its costs.

Long-Run ATC

The average total cost of production when all inputs, including capital, are variable and the scale of production can change.

Diseconomies of Scale

The phenomenon where operational costs per unit increase as the output increases, often due to inefficiencies or management challenges.

Natural Monopoly

A market structure where a single supplier is most efficient in producing or providing goods or services due to high fixed or startup costs, making competition less viable.