Which of the Following Is an Administrative (Non-Economic)reason for Holding

question 35

Multiple Choice

Which of the following is an administrative (non-economic) reason for holding cash?

• A)To pay bills for the goods and services used
• B)To meet short-term obligations
• C)To compensate banks for services
• D)To have cash available to take advantage of unexpected opportunities

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Definitions:

Direct Labor Costs

Expenses that can be directly traced to the production of goods or services, including wages of workers who are physically involved in creating a product.

Predetermined Overhead Rate

A rate calculated by dividing estimated overhead costs by an allocation base, used to apply overhead to products or services.

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the expected (or standard) quantity, measured in financial terms.

Direct Materials

These are the raw materials that are directly incorporated into a finished product.