Which of the Following Accounts Would Normally Increase with an Increase

question 70

Multiple Choice

Which of the following accounts would normally increase with an increase in sales and approximately in proportion to the sales increase?

• A) Common stock
• B) Inventory
• C) Notes payable
• D) Dividends

---

Definitions:

Average Fixed Costs

Average fixed costs refer to the fixed costs of production (costs that do not change with the level of output) divided by the quantity of output produced, which decreases as output increases.

Total Cost

The entire production cost, comprising both unchanging and variable expenditures.

Diminishing Marginal Product

A principle stating that as additional units of a variable input are added to a fixed input, the additional output produced by each new unit will eventually decline.

Marginal Product

The additional output generated by using one more unit of a specific input, keeping other inputs constant.