Which of the Following Accounts Is Least Likely to Vary

question 37

Multiple Choice

Which of the following accounts is least likely to vary directly with the levels of sales?

• A) Accounts receivable.
• B) Inventory.
• C) Income taxes.
• D) Cost of goods sold
• E) Long-term debt.

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Definitions:

Selling and Administrative Expense

Costs not directly tied to production, including marketing, managers' salaries, and rent for office space.

Cash Basis

A method of accounting where transactions are recorded when cash is either received or paid.

Investing Activities

Transactions involving the purchase and sale of long-term assets and investment securities, reflected in a company's cash flow statement.

Direct Method

A cost allocation approach directly assigning service department costs to producing departments without any intermediate steps.