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

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

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

Inventory purchase costs

Sales commissions

Advertising expenses

Lease payments on retail store buildings

Previous problemNext problem

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 problem: Inventory purchase costs are variable costs because they depend on the quantity of goods purchased. Sales commissions are also variable costs as they depend on the level of sales achieved. Advertising expenses can be discretionary and adjusted based on the company's budget and strategy.

Focus on lease payments: Lease payments on retail store buildings are a committed fixed cost because they represent a long-term contractual obligation that the retailer must pay regardless of sales or other operational factors.

Compare lease payments to other costs: Unlike inventory purchase costs, sales commissions, or advertising expenses, lease payments cannot be easily reduced or eliminated in the short term without breaching a contract.

Conclude that lease payments on retail store buildings are the correct answer because they align with the definition of committed fixed costs, which are long-term and unavoidable obligations.