Idle Production Capacity Can Be Reduced by

question 17

Multiple Choice

Idle production capacity can be reduced by

• A) using a straight salary compensation plan.
• B) hiring additional full-time personnel.
• C) allowing personnel to work overtime.
• D) increasing the hours worked per week.
• E) reducing worker hours.

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Definitions:

Current Ratio

A liquidity ratio calculated as current assets divided by current liabilities, indicating the ability of a company to pay short-term obligations.

Current Liabilities

Debts or obligations that a company expects to pay off within one fiscal year, including accounts payable, short-term loans, and accrued expenses.

Current Assets

Assets that a company expects to convert into cash, sell, or use up within one year or within its operating cycle if longer than a year.

Reversing Entries

Journal entries made at the beginning of an accounting period to reverse or cancel out adjusting entries made at the end of the previous period.