The Interest Rate Used to Bring Future Sums Back to Present

question 12

Multiple Choice

The interest rate used to bring future sums back to present value is

• A) always negative.
• B) zero when there is no inflation.
• C) the rate of discount.
• D) the prime rate.

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Definitions:

Activity-Based Costing

An accounting method that identifies and assigns costs to specific activities, making it easier to accurately measure the cost and performance of particular activities.

Machine-Hours

A measure of production time that refers to the number of hours a machine is in operation.

Activity Rate

It is a measure used in activity-based costing to allocate overhead costs to products or services, based on the activities that go into producing them.

Processing Activity

Tasks or operations involved in transforming raw materials into finished goods or services, often part of the production process.