A Delivery Company Is Creating a Statement of Financial Position

question 3

Multiple Choice

A delivery company is creating a statement of financial position.Which of the following would most likely be considered a short-term liability on this statement of financial position?

• A)the depreciation over the last year in the value of the vehicles owned by the company
• B)revenue received for the delivery of items that have not yet been delivered
• C)a loan which must paid back in two years' time
• D)prepaid rent on the offices occupied by the company
• E)money owed to the firm by customers who have purchased goods on credit

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Definitions:

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, as the cost per unit of output decreases with increasing scale.

Specialization of Labor

The division of labor where individuals focus on a limited scope of tasks or skills, leading to increased efficiency and productivity.

Average Fixed Costs

The fixed costs of production (costs that do not vary with the level of output) divided by the quantity of output produced.

Output

Output is the total amount of goods or services produced by a person, machine, business, or country.