When Analyzing Financial Statements, Prognosis Is

question 84

Multiple Choice

When analyzing financial statements, prognosis is

• A) The prediction of how a business will perform in the future
• B) The identification of the trends in past numbers
• C) The prediction of how many employees will lose their jobs in the coming year
• D) The identification of where a business has problems

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Definitions:

Activity Index

A measure used to allocate overhead costs, based on activities that drive costs such as machine hours or labor hours.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity, allowing for more accurate budgeting.

Activity Index

A measure or indicator used to assess the level or intensity of activity within a certain area or field.

Variable Costs

Expenses that change in proportion to the activity of a business, such as production volume or sales.