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.

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Definitions:

Goodwill

An intangible asset that arises when a business is acquired for more than the fair value of its net identifiable assets.

Taxable Income

The amount of income used to calculate how much tax an individual or a company owes to the government.

Consolidated Income

The total net income of a parent company and its subsidiaries, after accounting for the ownership interest of noncontrolling shareholders.