Discuss at Least Three Disadvantages of Using Credit

question 70

Essay

Discuss at least three disadvantages of using credit.

Utilize cost per unit and per activity measures in budgeting processes.

Identify favorable and unfavorable variances and their implications for management.

Understand the concept of flexible budgeting and how it adapts to changes in activity levels.

Calculate and analyze variances between planning and actual budgets.

---

Definitions:

Present Value

The current worth of a future sum of money or stream of cash flows, given a specified rate of return.

Payments

The transfer of money or its equivalent from one party to another as a fulfillment of an obligation or for the acquisition of goods or services.

Compounded Semiannually

Refers to the process of applying interest to a principal sum twice a year, resulting in an increase in the amount of interest earned or paid.

Semiannual

Occurring twice a year; pertaining to a period of six months.