An Equipment Lease That Specifies a Payment of $8,000 Per

question 68

Multiple Choice

An equipment lease that specifies a payment of $8,000 per month plus $7 per machine hour used is an example of a

• A)fixed cost.
• B)variable cost.
• C)step cost.
• D)mixed cost.

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Definitions:

Operating Activities

Business activities directly related to the production, sale, and delivery of a company's products and services, generating revenue and expenses.

Accounts Receivable

Receivables due from clients to a business for products delivered or services performed but not yet compensated.

Income Tax Payable

Represents the amount of income tax owed to the government that has not yet been paid.

Direct Method

A way to prepare the cash flow statement where actual cash flows from operating activities are reported instead of adjustments from net income.