Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

9. Current Liabilities

Types of Liabilities

Financial Accounting

9. Current Liabilities

Types of Liabilities

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Multiple Choice

Which of the following costs would most likely be classified as a committed fixed cost for a retailer?

Cost of goods sold

Long-term lease payments for retail store space

Commissions paid to sales staff

Advertising expenses for a seasonal sale

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Verified step by step guidance

Understand the concept of committed fixed costs: These are costs that a company is obligated to pay over the long term and cannot be easily adjusted or eliminated in the short term. Examples include lease payments, depreciation, and salaries of permanent staff.

Analyze each option provided in the question to determine whether it fits the definition of a committed fixed cost:

Option 1: Cost of goods sold - This is a variable cost that changes with the level of sales or production, so it is not a committed fixed cost.

Option 2: Long-term lease payments for retail store space - These are fixed costs that the retailer is obligated to pay over the long term, regardless of sales or production levels. This fits the definition of a committed fixed cost.

Option 3: Commissions paid to sales staff - These are variable costs that depend on the level of sales, so they are not committed fixed costs. Option 4: Advertising expenses for a seasonal sale - These are discretionary costs that can be adjusted or eliminated, so they are not committed fixed costs.