Which of the Following Actions Could INCREASE a Firm's Working

question 28

Multiple Choice

Which of the following actions could INCREASE a firm's working capital gap?

• A)increase the age of accounts payable
• B)decrease the age of accounts receivable
• C)reduce the age of inventory
• D)None of the above.

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Definitions:

Traditional Cost Systems

Traditional cost systems allocate overhead costs based on measures like direct labour hours or machine hours, often resulting in less accurate product costing.

Committed Resource

Assets or inputs that a company has dedicated to a certain project or operational activity, reflecting a long-term investment or commitment.

ABC Implementation

The process of applying Activity-Based Costing, an accounting method that assigns costs to activities based on their use of resources.

Uncertainty

A condition characterized by a lack of sufficient knowledge, making it difficult to precisely identify the current situation, predict future events, or acknowledge multiple potential outcomes.