Which of the Following Statements Concerning Lumpy Assets Is Correct

question 12

Multiple Choice

Which of the following statements concerning lumpy assets is correct?

• A)Purchasing lumpy assets generally does not have a significant effect on the amount of fixed assets a firm holds.
• B)Lumpy assets normally are extremely liquid.
• C)If it can only purchase lumpy assets, it is possible that a firm will be required to invest a substantial amount in plant and equipment to attain a small projected increase in sales.
• D)Lumpy assets can be acquired in small increments.
• E)Lumpy assets generally have lives that are less than 12 months.

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Definitions:

Financial Statements

Formal records that outline the financial activities and condition of a business, entity, or individual.

Net Income

The remaining earnings of a business after subtracting all outgoings and tax liabilities from its total earnings.

Balance Sheet

A financial statement that reports a company's assets, liabilities, and equity at a specific point in time, giving insight into its financial position.

Income Statement

A financial statement that reports a company's financial performance over a specific period, including revenues, expenses, and net income.