With the Aid of Computer Software, Managers Can Vary Assumptions

question 54

Multiple Choice

With the aid of computer software, managers can vary assumptions regarding selling prices, costs, and volume and can immediately see the effects of each change on the break-even point and profit. This is called

• A) "what if" or sensitivity analysis
• B) vary the data analysis
• C) computer-aided analysis
• D) data gathering

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Definitions:

Understandability

A characteristic of financial information that makes it comprehensible to those with a reasonable knowledge of business and economic activities.

Decision Usefulness

A principle in accounting that information should help users make decisions regarding their investments, credit, and similar considerations.

Conceptual Framework

A system of interrelated objectives and fundamentals that provides the foundation for financial accounting and reporting standards.

Accounting Project

A task or series of tasks undertaken to maintain, review, or improve the financial recording and reporting processes within an organization or for a specific purpose.