What Are Business Liabilities

question 86

Multiple Choice

What are business liabilities?

• A)Amounts it expects to collect in the future from customers.
• B)Debts or obligations resulting from past business events.
• C)The amounts that owners have invested in the business.
• D)The increases in assets that result from profitable operations.

Calculate predetermined overhead rates based on different bases (machine-hours, direct labor-hours, capacity).

Identify unused capacity cost and its implications on financial statements.

Analyze the effect of overhead allocation on product costs and pricing strategies.

Evaluate the impact of manufacturing overhead costs on gross margin.

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Definitions:

Opportunity Costs

The expense incurred by not choosing the second-best option available during decision-making.

Initial Cash Flow

The first influx or outflow of cash associated with an investment or project, marking the beginning of its cash flow timeline.

Sunk Costs

Expenses that have already been incurred and cannot be recovered, which should not influence future business decisions.

Replacement Projects

Investments made to replace worn-out or obsolete assets with new assets.