Which of the Following Is an Advantage of Utilizing Short-Term

question 154

Multiple Choice

Which of the following is an advantage of utilizing short-term debt to finance the acquisition of short-term assets?

• A) Interest rates on short-term debt are usually lower than interest-rates on long-term debt.
• B) It exposes the firm to less risk than if the firm were to use long-term debt.
• C) It improves the firm's debt ratio.
• D) It increases the firm's sustainable growth rate.

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Definitions:

Job Order Costing

An accounting methodology used to assign production costs to individual products or batches, based on the specific jobs or orders.

Direct Labor Hour

A measure of the labor time spent on a specific project or production activity, often used for costing purposes.

Work in Process Inventory

The value of goods in various stages of production in a manufacturing company, not yet completed.

Work in Process

Inventory representing partially completed goods that are still in the process of production.