When a Liability Increases Which of the Following Is NOT

question 22

Multiple Choice

When a liability increases which of the following is NOT correct?

• A) An expense may increase.
• B) An asset may increase.
• C) Shareholders' equity may increase.
• D) Shareholders' equity may decrease.

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Definitions:

Production

The process of creating, manufacturing, or generating goods and services.

Cost Curve

A graphical representation showing the cost of producing different quantities of a good or service.

Absorption Costing

An accounting method that includes all manufacturing costs (direct materials, direct labor, and both variable and fixed manufacturing overhead) in the cost of a product.