The Test to Determine Whether an Item of Accounting Information

question 53

Multiple Choice

The test to determine whether an item of accounting information is worthwhile collecting is:

• A) cost test.
• B) validation test.
• C) cost-benefit test.
• D) worthwhile test.

Grasp the roles and responsibilities of designated category leaders.

Learn how demand uncertainty affects manufacturer-retailer relationships and the use of contracts to ensure product availability.

Understand the foundational elements necessary for successful collaborative planning, forecasting, and replenishment (CPFR) in supply chains.

Understand the concept and disadvantages of vendor-managed inventory.

---

Definitions:

Diversifiable Risk

A type of investment risk that can be reduced or eliminated through portfolio diversification, as opposed to systemic risk which affects all investments.

Systematic Risk

The inherent risk that affects the entire market or a certain segment of the market, often influenced by factors like political, economic, and interest rate changes that cannot be mitigated through diversification.

Firm-specific Risk

The type of risk that affects a particular company or industry, as opposed to systemic risk, which affects the entire market.

Correlation Coefficient

A statistical measure that describes the extent to which two variables fluctuate together, ranging from -1 (perfect negative correlation) to +1 (perfect positive correlation).