An Item That Would Not Be Accounted for Under Current

question 34

Multiple Choice

An item that would not be accounted for under current GAAP as a change in estimate would be

• A)an increase in the expected life of a piece of manufacturing equipment
• B)a decrease in the estimated residual value of a delivery van
• C)a change from FIFO to LIFO for a small subsidiary
• D)an increase in defective items for the best selling video game

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Definitions:

High Variance

Referring to investments or processes that exhibit a wide dispersion of possible outcomes or returns, often indicating higher risk.

Risk-Adjusted Techniques

Financial analysis methods that modify the results of investments and projects to take their risk into account, aiming to provide a more accurate assessment of their potential returns or value.

Performance Measurement

The process of evaluating how effectively an investment or portfolio has performed, often compared to a benchmark.

Portfolio Risk

The uncertainty or potential for financial loss in an investment portfolio due to market volatility.