Which of the Following Is Not a Reason Why a Company

question 130

Multiple Choice

Which of the following is not a reason why a company might prefer to report a liability as long-term rather than current?

• A)It may cause the firm to appear less risky to investors and creditors.
• B)It may increase interest rates on borrowing.
• C)It may cause the company to appear more stable commanding a higher stock price for new stock listings.
• D)It may reduce interest rates on borrowing.

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Definitions:

Total Cost

The complete cost of production, including both fixed and variable costs.

Mixed Cost

Expenses that have both fixed and variable components, changing with the level of production or sales activity.

Client-visits

The occurrence of clients or potential clients physically coming to a business location or being visited by the business’s representatives.

High-low Method

A technique used in cost accounting to estimate variable and fixed cost elements of a cost by using the highest and lowest activity levels.