Which of the Following Are the Two Most Important Keys

question 62

Multiple Choice

Which of the following are the two most important keys to short-term business decision-making?

• A) Focus on costs which do not change under two alternatives and on historic costs
• B) Focus on qualitative data only and ignore future cash flows
• C) Focus on sunk costs and quantitative data only
• D) Focus on future expected data and use the contribution margin approach

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Definitions:

Consolidated Balance Sheet

A financial statement showing the combined assets, liabilities, and equity of a parent company and its subsidiaries as if they were a single entity.

Fair Value Enterprise Method

An approach to valuation that estimates the price at which an entire business would exchange between knowledgeable and willing parties.

Journal Entry

A record of financial transactions in the accounting system of a business, consisting of debits and credits.

Elimination Entry

Elimination entry involves making accounting entries in consolidated financial statements to remove the effects of intercompany transactions.