Which of the Following Statements Is CORRECT

question 7

Multiple Choice

Which of the following statements is CORRECT?

• A) One way to increase EVA is to achieve the same level of operating income but with more investor-supplied capital.
• B) If a firm reports positive net income,its EVA must also be positive.
• C) One drawback of EVA as a performance measure is that it mistakenly assumes that equity capital is free.
• D) One way to increase EVA is to generate the same level of operating income but with less investor-supplied capital.
• E) Actions that increase reported net income will always increase net cash flow.

Understand the differentiation between direct and indirect expenses.

Grasp how to allocate indirect expenses based on various bases such as square footage, gross sales, and goods shipped.

Calculate the proportional allocation of expenses to different departments based on applicable allocation bases.

Identify which expenses are considered direct or indirect in the context of departmental accounting.

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Definitions:

Fixated

Exhibiting an obsessive focus on an idea, task, or object, often at the expense of the ability to engage with a broader range of topics or activities.

Superego

The part of personality that, according to Freud, represents internalized ideals and provides standards for judgment (the conscience) and for future aspirations.

Ego

The largely conscious, “executive” part of personality that, according to Freud, mediates among the demands of the id, superego, and reality. The ego operates on the reality principle, satisfying the id’s desires in ways that will realistically bring pleasure rather than pain.

Temper Tantrum

An emotional outbreak, usually exhibited by children, characterized by crying, screaming, or aggressive behaviors in response to frustration or lack of control.