The Classification of Liabilities into Current and Non-Current, Is Useful

question 12

Multiple Choice

The classification of liabilities into current and non-current, is useful as it helps decision-makers assess the firm's ability to meet all of the following except:

• A) commitments which are part of the operating cycle.
• B) dividends.
• C) profitability.
• D) capital repayments.

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Definitions:

Direct Materials

Raw materials that are directly used in the production of goods and can be easily traced to the product.

Direct Labour

The workforce directly involved in manufacturing goods or providing services, where their labor can be directly tied to end products.

Variable Manufacturing Overhead

Costs in the production process that vary with the level of output, such as utilities for the machinery.

Specialized Machine Cost

The acquisition and operational costs associated with machinery that is designed for specific, specialized tasks in production.