The Flexibility Principle of Accounting Information Systems Prescribes That The

question 37

Multiple Choice

The flexibility principle of accounting information systems prescribes that the:

• A)Benefits from an activity in the system outweigh the costs of the activity.
• B)System report useful,understandable,timely,and pertinent information for effective decision making.
• C)System aid managers in controlling and monitoring business activities.
• D)System be able to adapt to changes in the company,business environment,and needs of decision makers.
• E)System conforms to a company's activities,personnel,and structure.

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Definitions:

Contribution Margin Ratio

A financial metric that measures the proportion of revenue that exceeds variable costs, indicating how much of sales revenue is available to cover fixed costs and generate profit.

Fixed Costs

Costs that remain constant regardless of the amount of output or the level of business operations, including expenses like rent, wages, and insurance fees.

Rent Expense

The cost incurred from renting property or equipment for business or personal use, recognized as an expense on the income statement.

Margin of Safety

The difference between actual sales and the break-even point, used as a buffer against unpredictability in business performance.