If a Firm Is Operating at Its Full Capacity, Future

question 45

Multiple Choice

If a firm is operating at its full capacity, future increases in sales will require _____. 

• A)it to attain economies of scale in its operations
• B)it to issue new long-term debt
• C)large amounts of new spontaneously generated funds to support expected growth
• D)additional fixed assets
• E)lumpy current assets to be purchased

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Definitions:

Capital Balances

The amount of money that owners have invested in a company plus any retained earnings or losses.

Net Income

The total profit of a business after all expenses and taxes have been deducted from total revenue.

Closing the Revenue

The process of transferring the balances from the revenue accounts to permanent accounts at the end of an accounting period.

Building Account

An account used to track the costs associated with constructing a building over a period of time.