The First Step for Management in the Risk Assessment Process

question 22

Multiple Choice

The first step for management in the risk assessment process is to identify factors that may increase risk,for example failure to meet prior objectives.Then,management will

• A)assess the likelihood of the risk occurring.
• B)make sure that procedures are developed to eliminate the risk.
• C)estimate the significance of that risk.
• D)develop specific actions to reduce the risk to an acceptable level.

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Definitions:

Variable Costing

A cost accounting method that encompasses solely variable costs involved in production (direct materials, direct labor, and variable manufacturing overhead) for product cost calculation.

Contribution Format

A type of income statement layout that separates fixed costs from variable costs to highlight the contribution margin.

Absorption Costing

An accounting method that includes all manufacturing costs, both fixed and variable, in the cost of a produced unit.

Income Statement

A financial statement that shows a company's revenues, expenses, and profit over a specific period, typically a quarter or year.