Using the High-Low Method, the Calculation of the Cost Line

question 61

True/False

Using the high-low method, the calculation of the cost line uses the highest and lowest activity period.

---

Definitions:

Accounts Receivable

Financial obligations of customers towards a company for delivered but unpaid goods or services.

Net Working Capital

A calculation of a firm's ability to cover its short-term obligations, determined by subtracting current liabilities from current assets.

Inventory

The total amount of goods and materials held in stock by a business or warehouse.

Depreciation

The systematic reduction of the recorded cost of a fixed asset over its useful life to reflect wear and tear or obsolescence.