If Payoffs Are Costs Rather Than Profits, Then

question 68

Multiple Choice

If payoffs are costs rather than profits, then

• A) using any quantitative decision making tools is not possible at all.
• B) it is necessary to find more financial data of the company to determine the profits.
• C) the tools have to be adjusted so that a profit maximization method becomes a cost minimization method, for example.
• D) none of the above.

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Definitions:

Other Comprehensive Income

This includes revenues, expenses, gains, and losses that are excluded from net income on the income statement.

Equity Method

A method of accounting for investments in which the investor recognizes income based on the proportionate share of the investee’s profit or loss.

Investment Account

An account held at a financial institution or brokerage that is used to hold securities, stocks, bonds, mutual funds, and other investments.