The Costs Incurred by a Business in an Effort to Avoid

question 43

Multiple Choice

The costs incurred by a business in an effort to avoid bankruptcy are classified as ________ costs.

• A) flotation
• B) direct bankruptcy
• C) indirect bankruptcy
• D) financial solvency
• E) capital structure

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Definitions:

Fixed Monthly Expenses

Regularly occurring costs that do not vary in amount from one month to the next, such as rent or loan payments.

Net Operating Income

The revenue left over after subtracting operating expenses, but before deducting interest and taxes.

Selling Price

The price at which a product or service is offered for sale to customers.

Sales Volume

The quantity of products or services sold by a company in a specific period.