Whether a Cost Behaves as a Fixed Cost or as a Variable

question 44

Multiple Choice

Whether a cost behaves as a fixed cost or as a variable cost depends upon the:

• A) presence of fixed costs.
• B) cost structure of the company.
• C) industry.
• D) activity base used.

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Definitions:

Balance Sheet Element

Components of a balance sheet which typically include assets, liabilities, and shareholders' equity.

GAAP

Generally Accepted Accounting Principles, which are a common set of accounting rules and standards used in the United States.

Marketable Securities

Financial instruments that can be quickly converted into cash with minimal loss in value.

Unrealized Increase

The increase in value of an asset that has not yet been sold or disposed of. It represents potential profit, but it is not reflected in the financial statements until the gain is realized.