Which of the Following Statements Is Not True When FLK

question 99

Multiple Choice

Which of the following statements is not true when FLK Company discounts a note receivable to the bank?

• A)FLK may ultimately have to pay the bank when the note is due.
• B)If the maker of the note pays the bank on time,no liability will result to FLK.
• C)FLK will receive the maturity value from the bank.
• D)A contingent liability arises for FLK.

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Definitions:

Contribution Margin

The amount of revenue remaining after deducting variable costs, used to cover fixed costs and generate profit.

Variable Cost

Expenses that vary depending on the amount of products or services a company generates.

Contribution

The amount of money or resources that an individual or entity provides towards a particular project, investment, or cause.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the proportion of fixed to variable costs.