Which of the Following Statements Is CORRECT

question 9

Multiple Choice

Which of the following statements is CORRECT?

• A) Net working capital is defined as current assets minus the sum of payables and accruals, and any increase in the current ratio automatically indicates that net working capital has increased.
• B) Although short-term interest rates have historically averaged less than long-term rates, the heavy use of short-term debt is considered to be an aggressive strategy because of the inherent risks associated with using short-term financing.
• C) If a company follows a policy of "matching maturities," this means that it matches its use of common stock with its use of long-term debt as opposed to short-term debt.
• D) Net working capital is defined as current assets minus the sum of payables and accruals, and any decrease in the current ratio automatically indicates that net working capital has decreased.

Distinguish between various forms of communication and research methods.

Recognize the importance of evaluating the reliability of online resources.

Identify the defining characteristics of qualitative and quantitative research methods.

Differentiate between special and general libraries.

---

Definitions:

Volume Variance

The difference between the budgeted and actual volume of production, affecting fixed costs allocation.

Machine-Hours

A unit of measure representing the operation time of a machine, often used in allocating manufacturing costs based on machine usage.

Fixed Overhead Volume Variance

The difference between the budgeted fixed overhead and the applied fixed overhead, which is attributed to the variance in the volume of production.

Standard Labor-Hours

A measurement used in accounting to represent the number of labor hours expected to produce one unit of output.