which of the following account would most likely vary directly with the level of

Question

which of the following account would most likely vary directly with the level of firm sales?

Cash       Yes           no

Cash_________________

Notes payable________________

Marketable securities____________________

Plant and equipment____________________

Accounts Payable_________________________

Inventories___________________________

Long-term debt___________________

I know that the answer to cash is yes. Notes Payable is no. Marketable Securities is yes. Plant and equipment is yes. I am not sure about the last three though.

Explanation / Answer

Account Yes/No Commets Cash Yes Since cash will increase if sales increase and vice versa Notes Payable No Marketable Securities No Plant and Equipment Yes As to meet sales company should have capacity to produce thus more investment in Plant and equipment in case of increase in sales and vice versa Accounts payable Yes Since company will have to purchase more in case of increase in sales thus AP will increase and Vice versa Inventory Yes Company would have to maintain larger inventory in case of increase in sales Long term debt No

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