The Criteria for Evaluating Quantitative Information Vary

question 47

Multiple Choice

The criteria for evaluating quantitative information vary.For example, in the audit of historical financial statements by public accounting firms, the criteria are usually:

• A) regulations of the Australian Taxation Office.
• B) regulations of the Australian Securities and Investment Commission.
• C) applicable accounting standards.
• D) generally accepted auditing standards.

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Definitions:

Average Accounting Return

A measure of the profitability of an investment, calculated as the average net income generated by an investment divided by its initial cost.

Marginal Tax Rate

The rate at which your last dollar of income is taxed, essentially the tax rate that applies to each additional dollar of income.

Start-Up Cost

Expenses incurred before a business begins operating, including costs such as legal fees, marketing, equipment purchases, and rent.

Crossover Rate

The point at which two or more projects have the same net present value or rate of return, used in capital budgeting to compare projects.