Which of the Following Are Factors That Managers May Use

question 89

Multiple Choice

Which of the following are factors that managers may use in deciding whether to investigate a variance?

• A)Materiality and the effect of netting large and small variances
• B)The effect of netting large and small variances and whether favorable or unfavorable
• C)Whether the variance will increase or decrease operating income and materiality
• D)Materiality and whether the variance will increase or decrease total costs

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Definitions:

Warrants

Securities that grant the holder the right to purchase the issuer's stock at a specified price within a certain time frame.

Exercise Price

The rate at which an option's owner is entitled to purchase or sell the base asset.

Coupon Interest Rate

The annual interest rate paid on a bond, expressed as a percentage of the face value, paid from issuer to bondholder.

Straight Bonds

Debt securities issued by corporations or governments that pay periodic interest payments and return the principal amount at maturity without any special features such as convertibility or callability.