If the Assets Shown on a Balance Sheet Are Subjected

question 69

Multiple Choice

If the assets shown on a balance sheet are subjected to vertical analysis (using total assets as the base) , a decrease in the figure for noncurrent assets from 55% to 40% would always mean that:

• A)the dollar amount of current assets has decreased.
• B)total noncurrent assets have decreased as a percentage of total assets.
• C)both A and B are correct.
• D)neither A nor B are correct.

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Definitions:

Total Cost

The complete cost of production, including both fixed and variable costs, incurred by a firm in producing and selling a quantity of a good or service.

Variable Cost

Expenses that vary in relation to the amount of products or services a company generates.

Fixed Cost

Costs that do not change with the level of production or sales, such as rent, salaries, and loan repayments.

Economies of Scale

The cost advantages that a business can exploit by expanding their scale of production, leading to a lower cost per unit.