An Item Which May Be Converted to Cash Within One

question 47

Multiple Choice

An item which may be converted to cash within one year or one operating cycle of the firm is classified as a

• A) current liability.
• B) long-term asset.
• C) current asset.
• D) long-term liability.

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Definitions:

Cost Behaviour

The characteristic of costs that they either remain stable or change in response to variations in business activity levels.

Sales in Units

The total number of individual items sold by a company, as distinguished from sales measured in currency.

Indirect Costs

Expenses that are not directly traceable to a specific product or process, such as utilities or administrative salaries.

Contribution Margin

is the amount of revenue left after deducting variable costs, which can be used to cover fixed costs and contribute to profits.