All Liability Accounts Have Credit Balances

question 8

Multiple Choice

All liability accounts have credit balances.The accounts receivable account is a liability account.Therefore,the accounts receivable account has a credit balance.Which of the following statements is correct with respect to the above argument?

• A) The argument follows a logical and clear reasoning.
• B) The argument is illogical.
• C) The conclusion reached is clearly true.
• D) The classification of accounts receivable is consistent with the observed classification of receivables.

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Definitions:

Production Cost

The total expenses incurred in the process of creating a product or service, including raw materials, labor, and overhead costs.

High Supplier Power

A market condition where suppliers have significant influence over the market price and terms of products because of the lack of competition or alternatives.

Threat from Substitutes

The risk that alternative products or services may satisfy the same customer needs, potentially reducing demand for the current product.

Levels of Rivalry

Refers to the intensity of competition between firms in a market, ranging from monopolistic to perfectly competitive scenarios.