A Disadvantage of Contingency Funds Is

question 96

Multiple Choice

A disadvantage of contingency funds is:

• A)a recognition that the future contains both knowns and unknowns and the problems that might arise will impact the budget.
• B)it is difficult to ascertain across what project activities contingency funds should be applied.
• C)that application to the contingency fund gives an early warning signal of a potential overdrawn budget.
• D)that provision is made in the company plans for an increase in project cost.

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Definitions:

Write Off

An accounting action resulting in the reduction of the book value of an asset due to uncollectibility or loss of value, impacting profit and loss statements.

Accounting Equation

The fundamental equation that represents the relationship between a company's assets, liabilities, and shareholders' equity: Assets = Liabilities + Stockholders' Equity.

Note Receivable

A note receivable is a financial document representing a written promise for payment received by one party from another, typically including specifics of interest rate and maturity date.

Payment Receipt

A document that serves as proof of a transaction between two parties, indicating that payment has been made and received.