Which of the Following Is the Control Equation

question 15

Multiple Choice

Which of the following is the control equation?

• A) Need for Action = Desired Performance - Actual Performance
• B) Breakeven Point = Fixed Costs - (Price - Variable Costs)
• C) Acid Test = Current Assets - Inventories/Current Liabilities
• D) Debt Ratio = Total Debts/Total Assets
• E) Net Income = Sales - Expenses

Understand the role and development of normative theories in accounting.

Comprehend the components and consequences of agency costs, including monitoring and bonding costs, and residual losses.

Understand the economic assumptions underlying positive accounting theory, including the rational economic person assumption.

Recognize the importance of accounting policy decisions in financial reporting.

---

Definitions:

Humerus

A long bone in the arm or forelimb that runs from the shoulder to the elbow.

Glenoid Cavity

A shallow depression on the lateral surface of the scapula that articulates with the head of the humerus to form the shoulder joint.

Articulates

Joints or points of connection between bones in the skeletal system.

Humerus

The long bone in the upper arm or forelimb extending from the shoulder to the elbow.