Fixed Costs Are Costs

question 74

Multiple Choice

Fixed costs are costs:

• A)that do not vary with the level of output.
• B)that are incurred only in the long run
• C)that include only implicit costs.
• D)that include only implicit costs
• E)that can be avoided in the short run without going out of business.

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Definitions:

Cash Dividends

Payments made by a corporation to its shareholders, usually as a distribution of profits in the form of cash.

Equity Method

An accounting technique used by firms to assess the profits earned by their investments in other companies by reporting these profits as income.

Held-To-Maturity Securities

Investments in bonds or other debt securities that management intends to hold to their maturity.

Fair Market Value

The estimated price at which an asset would change hands between a willing buyer and seller, both having reasonable knowledge of the relevant facts, in an arm's length transaction.