The Six Principles of Finance Include (1) Money Has a Time

question 32

True/False

The six principles of finance include (1) Money has a time value, (2) Higher returns are expected for taking on more risk, (3) Diversification of investments can reduce risk, (4) Financial markets are efficient in pricing securities, (5) Manager and stockholder objectives may differ, and (6) Reputation matters.

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Definitions:

Variable Overhead Efficiency Variance

The difference between the actual hours taken to produce goods and the standard hours expected, multiplied by the variable overhead rate.

Variable Manufacturing Overhead

Costs in the manufacturing process that fluctuate with the level of production activity, such as utilities and materials.

Direct Labor-hours

The full amount of labor hours by employees directly contributing to the generation of products or services.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the expected (or standard) variable overhead based on a standard rate.