A Firm That Exits Its Market Has to Pay

question 200

Multiple Choice

A firm that exits its market has to pay

• A)its variable costs but not its fixed costs.
• B)its fixed costs but not its variable costs.
• C)both its variable costs and its fixed costs.
• D)neither its variable costs nor its fixed costs.

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Definitions:

Operating Activities

Activities that relate directly to the production, sale, and delivery of a company's products or services, affecting the net income.

Accumulated Depreciation

The total amount of a tangible asset's cost that has been allocated to depreciation expense since the asset was put into use.

Operating Section

A part of the cash flow statement that shows the cash inflows and outflows from a company's primary operating activities.

Indirect Method

A way of reporting cash flows from operating activities on the cash flow statement where net income is adjusted for non-cash transactions, deferrals, and accruals.