Which of the Following Is a Disadvantage of the Use

question 8

Multiple Choice

Which of the following is a disadvantage of the use of current liabilities to finance assets?

• A) greater risk of illiquidity
• B) less flexibility
• C) higher interest costs
• D) the hedging principle

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Definitions:

Manufacturing Costs

Expenses directly associated with the production of goods, including direct materials, direct labor, and manufacturing overhead.

Income

The money received by an entity in return for its goods or services, or through investments.

Absorption Costing

A cost accounting method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a product.

Finished Goods

Products that have completed the manufacturing process and are ready to be sold to customers.