An Expense Variance Occurs When the Actual Amount of Expenditure

question 11

True/False

An expense variance occurs when the actual amount of expenditure is higher than the budgeted amount (or vice versa).

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Definitions:

Discounting

The process of determining the present value of future cash flows by applying a particular interest rate; often used in investment and finance.

Present Value

The value today of a future amount of money or sequence of cash inflows, accounting for a defined rate of return.

Interest Rate

The percentage of a sum of money charged for its use, serving as the cost of borrowing or the reward for saving.

Time Preference

The degree to which individuals prioritize current goods and services over future ones.