Spontaneous Debt Financing Results When Accounts Payable Increase in Proportion

question 36

True/False

Spontaneous debt financing results when accounts payable increase in proportion to a business's profits.

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Definitions:

AVC

AVC, or Average Variable Cost, is the total variable costs divided by the quantity of output produced.

MC

Marginal Cost, the increase in total cost that arises from producing one additional unit of a product or service.

Total Variable Cost

Total Variable Cost is the sum of all costs that vary with the level of output produced, such as materials and labor.

Total Fixed Cost

The total of all expenses that do not change with production volume or output in the short term, for example, lease payments or wages.