Average Fixed Cost

question 132

Multiple Choice

Average fixed cost:

• A) can be calculated by dividing total fixed cost by the level of output produced.
• B) can be graphed as a horizontal line, with dollars on the vertical axis and quantity on the horizontal axis.
• C) decreases as output increases.
• D) is characterized by both a. and c.

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Definitions:

Unearned Insurance Revenue

Income received by an insurance company for policies that have been paid in advance but the service has not yet been provided or earned.

Insurance Policy

A contract between an individual or entity and an insurance company, detailing the terms for payment of losses or damages covered by the policy.

Sales Taxes Payable

Liabilities recorded on the balance sheet for sales tax collected from customers on behalf of governmental entities, to be remitted in the future.

Sales Tax Expense

The cost incurred by a business collecting sales tax from customers, which is then remitted to the government, not to be confused with a direct business expense.