Which of the Following Statements Is False

question 9

Multiple Choice

Which of the following statements is false?

• A) Cash equivalents are included in cash on the balance sheet and on the statement of cash flows.
• B) Investments in cash equivalents and investments in stock have the same economic effect--assets increase and decrease by the same amount.
• C) An investment is a cash equivalent if it is convertible into a known amount of cash and has an original maturity of 3 months or less when purchased.
• D) Investments in stock are reported as a financing activity on the statement of cash flows.

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Definitions:

Two-Variance Analysis

An analytical technique in managerial accounting where variances between expected and actual performance are divided into a volume variance and a rate or efficiency variance.

Overhead Controllable

Expenses incurred in the running of a business that management can directly influence or control, such as supplies and advertising.

Overhead Volume

Overhead Volume refers to the level of overhead costs that correlate with the level of production or activity in a company.

Variance Reports

Reports that analyze the difference between planned figures and actual figures for a particular metric, helping management understand performance discrepancies.