Which One of the Following Is Indicative of a Short-Term

question 51

Multiple Choice

Which one of the following is indicative of a short-term restrictive financial policy?

• A)purchasing inventory on an as-needed basis
• B)granting credit to all customers
• C)investing heavily in marketable securities
• D)maintaining a large accounts receivable balance
• E)keeping inventory levels high

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Definitions:

Fixed Manufacturing Overhead

The total of all costs that remain constant regardless of the level of production, including expenses such as rent, utilities, and salaries of permanent staff in a manufacturing setting.

Variable Costing

An accounting method that only includes variable production costs (direct materials, direct labor, and variable manufacturing overhead) in product costs, excluding fixed overhead costs.

Segmented Income Statement

A financial statement that breaks down income, expenses, and profit margins by specific segments, such as products, services, or geographical regions, within a company.

Contribution Format

A style of income statement presentation that separates fixed costs from variable costs, highlighting the contribution margin.