How Does Seasonality Create Fluctuations in a Firm's Net Income

question 45

Multiple Choice

How does seasonality create fluctuations in a firm's net income over a year?

• A) Cost of goods sold will rise and fall along with sales, while administrative and other costs will remain relatively steady.
• B) Cost of goods sold will rise when sales fall, and vice versa, while administrative and other costs will remain relatively steady.
• C) Cost of goods sold, along with administrative and other costs, will rise when sales fall, and vice versa.
• D) Cost of goods sold, along with administrative and other costs, will rise and fall along with sales.

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Definitions:

Necessary

Essential or needed to achieve a desired result or fulfill a specific purpose.

Age of Majority

The legally defined age at which a person is considered an adult and is granted the full legal rights and responsibilities of adulthood.

Legal Position

The stance or standpoint taken by a party on legal matters, based on rights, laws, and responsibilities.

Infant

A minor or young child, especially one below the age of legal adulthood.