Sensitivity Analysis Can Best Be Used in the Budgeting Process

question 131

Multiple Choice

Sensitivity analysis can best be used in the budgeting process to:

• A) explore the uncertainty surrounding their estimates.
• B) remove the subjective nature from the budgeting process.
• C) answer "what-if" questions regarding key projections.
• D) consider alternatives and options in the budgeting process.

---

Definitions:

Consolidation Worksheet

A tool used in preparing consolidated financial statements, aiding in the combination of financial information from multiple entities within a corporate group.

Initial Value Method

A method used in accounting to record investments based on their acquisition costs without any subsequent change except for impairments.

Treasury Stock Approach

A method of calculating the effect of share options on diluted earnings per share by assuming treasury shares are bought at the average market price.

Long-Term Liabilities

Liabilities that are not due to be settled within the next 12 months.