Damian, a Recent College Graduate with a Degree in Accounting

question 334

Multiple Choice

Damian, a recent college graduate with a degree in accounting, is helping a newly formed construction company set up its accounting system. Although the company had purchased accounting software, Damian wants to make certain that future reports will distinguish between current liabilities and long-term liabilities. In the future, he will need to know the amount of total current liabilities in order to

• A) know when it is time to make a long-term mortgage payment.
• B) calculate if the company has purchased too much inventory for home building.
• C) analyze whether the company can afford to make capital purchases such as additional land acquisition.
• D) analyze whether the company has enough funds to pay the near-term bills.

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Definitions:

Price Increase

A situation where the cost of goods and services rises over a period.

Industry Supply Curve

A graphical representation that shows the quantity of goods that all producers in an industry are willing and able to supply at different price levels.

Upward Slope

A line on a graph that displays a positive relationship between two variables, indicating that as one variable increases, the other variable also increases.

Price Takers

Businesses or individuals that accept the prevailing prices in the market because they do not have enough power to influence them.