Which of the Following Statements Is Not True When FLK

question 99

Multiple Choice

Which of the following statements is not true when FLK Company discounts a note receivable to the bank?

• A)FLK may ultimately have to pay the bank when the note is due.
• B)If the maker of the note pays the bank on time,no liability will result to FLK.
• C)FLK will receive the maturity value from the bank.
• D)A contingent liability arises for FLK.

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Definitions:

Diminishing Returns to Scale

A situation where, as more inputs are used, the incremental increase in output decreases.

Economies of Scale

Economies of scale refer to the cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output decreasing with increasing scale.

Constant Returns to Scale

A situation in production where increasing the inputs exactly proportionally results in an equivalent increase in output.

Economies of Scale

The financial benefits gained by businesses as a result of their operation size, wherein the expense for each unit produced typically drops as the scale expands.