Multiple Choice
Stock warrants outstanding should be classified as:
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9. Current Liabilities
Types of Liabilities
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
The costs which are eliminated if a segment is eliminated are called:
A
Avoidable costs
B
Controllable costs
C
Direct costs
D
Committed costs
Verified step by step guidance1
Understand the concept of 'avoidable costs': These are costs that can be eliminated if a specific segment, product, or activity is discontinued. They are directly tied to the existence of the segment.
Differentiate 'avoidable costs' from other types of costs: For example, 'committed costs' are fixed costs that cannot be eliminated in the short term, even if the segment is discontinued. 'Controllable costs' are costs that can be influenced by management decisions, and 'direct costs' are costs directly attributable to a specific segment but may not necessarily be avoidable.
Analyze the problem statement: The question asks for the type of costs that are eliminated when a segment is eliminated. This aligns with the definition of 'avoidable costs.'
Review the options provided: Compare each option against the definition of 'avoidable costs' to ensure it matches the criteria. Avoidable costs are the correct answer because they are eliminated when the segment is discontinued.
Conclude the reasoning: Based on the definitions and analysis, the costs that are eliminated if a segment is eliminated are 'avoidable costs.'
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