Which of the following statements concerning lumpy assets is correct?
A)Purchasing lumpy assets generally does not have a significant effect on the amount of fixed assets a firm holds.
B)Lumpy assets normally are extremely liquid.
C)If it can only purchase lumpy assets, it is possible that a firm will be required to invest a substantial amount in plant and equipment to attain a small projected increase in sales.
D)Lumpy assets can be acquired in small increments.
E)Lumpy assets generally have lives that are less than 12 months.

Question

Quizplus · Accepted Answer

Lumpy assets refer to assets that can only be acquired in large or fixed amounts, such as heavy machinery or real estate. If a firm can only purchase lumpy assets, it may have to invest a substantial amount in plant and equipment to attain a small projected increase in sales. Therefore, statement C is the only correct one as the other statements are inaccurate.

Which of the Following Statements Concerning Lumpy Assets Is Correct