Which of the Following Is Not True Regarding the Use

question 14

Multiple Choice

Which of the following is not true regarding the use of short-term debt?

• A) It must be rolled over more often than long-term debt.
• B) There is uncertainty connected with interest costs on short-term debt from year to year.
• C) The firm is subjected to greater liquidity risk when using short-term credit.
• D) Interest rates are usually higher on short-term debt.

Understand the structure and benefits of M-form organizations.

Recognize budget manipulation tactics and their implications on organizational management.

Understand the concept of functional divisions within organizations and their impacts on performance evaluation.

Identify strategies for mitigating budget gaming in performance compensation.

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Definitions:

Marginal Cost

The change in total cost that arises when the quantity produced is incremented by one unit; essentially, the cost of producing one additional unit of a good.

Standby Customers

Customers who are available to purchase or subscribe to a service on an as-needed basis, often used in context with utilities or telecommunications.

Profit

The financial gain obtained when the revenue earned from business activities exceeds the expenses, costs, and taxes involved in sustaining the activity.

Economies of Scale

The cost advantage that arises with increased output of a product, leading to a reduction in the per-unit cost of production.