Which of the Following Factors Does NOT Represent an Effect

question 5

Multiple Choice

Which of the following factors does NOT represent an effect of corporate real estate ownership on corporate financial statements?

• A) The unrealized source of potential gain from the sale of property is not represented on annual income statements
• B) Income represented on accounting statements may underestimate the actual cash flows provided by property
• C) The book value of property on the balance sheet may not represent the actual market value.
• D) The corporation's overall debt ratio may be reduced,property is carried at book value but financed at market value.

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Definitions:

Committed Fixed Costs

Long-term fixed costs that cannot be easily altered in the short run, such as leases or contracts.

Fixed Cost Per Unit

A financial metric that represents the total fixed costs divided by the number of units produced. It decreases as production increases.

Variable Cost

A cost that varies in direct proportion to changes in the level of production or sales volume.

Cost Driver

A factor, such as machine-hours, beds occupied, computer time, or flight-hours, that causes overhead costs.