Which of the Following Is True of Relevant Costs

question 59

Multiple Choice

Which of the following is true of relevant costs?

• A)Relevant costs are future costs that differ across alternatives.
• B)Relevant costs are sunk costs that alter future decisions.
• C)Relevant costs have no effect on decision making.
• D)Relevant costs are past costs that do not differ from one alternative to another.

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Definitions:

Equity Method

An accounting technique used by companies to assess the profits earned by their investments in other companies by reporting these profits as income.

Retained Earnings

Cumulative net income of a company that has not been distributed to shareholders as dividends, reinvested in the business.

Non-Controlling Interest

The equity in a subsidiary not attributable, directly or indirectly, to a parent company.

Consolidated Shareholders' Equity

This is the total equity owned by shareholders as reported in the consolidated financial statements of a parent company and its subsidiaries.