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Why Is Activity-Based-Costing Used? What Is an Activity? Give an Example

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Why is activity-based-costing used? What is an activity? Give an example of an activity.


Definitions:

Litigation

The process of taking legal action in court to resolve disputes between parties.

Quick Ratio

A liquidity ratio that measures a company's ability to meet short-term obligations with its most liquid assets, calculated as (Cash + Marketable Securities + Receivables) / Current Liabilities.

Current Assets

Resources anticipated to be transformed into cash, disposed of, or used up within the span of one year or throughout the duration of the operating cycle, depending on which of the two periods extends further.

Current Liabilities

Financial obligations or debts a company is due to pay within a year.

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