Which of the Following Is NOT a Reason That Users

question 22

Multiple Choice

Which of the following is NOT a reason that users of government and not-for-profit external financial statements need to have information to enable them to assess the financial condition of a government?

• A)To determine the ability of the entity to meet its obligations.
• B)To determine the ability of the entity to continue to provide services.
• C)To predict future fiscal developments.
• D)To evaluate the overall profitability of the entity.

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Definitions:

Labor Rate Variance

The difference between the expected cost of labor per unit of production and the actual cost, often used to identify efficiency and wage rate changes.

Variable Overhead Efficiency Variance

The difference between the actual variable overhead incurred and the standard cost allocated for the actual production volume, resulting from efficiency in variable overhead resource usage.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the standard cost of variable overhead allocated for the actual production level.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the expected (standard) variable overhead based on actual production levels.