Which of the Following Statements Is Incorrect

question 43

Multiple Choice

Which of the following statements is incorrect?

• A)Full costs are useful in decision-making, because this approach focuses on future costs.
• B)The use of full costs is criticised, because it focuses on past costs.
• C)Full costing can lead to incorrect decision-making, because it can distort figures.
• D)Actual costs do not always follow the direction that the recovery rate may suggest.

---

Definitions:

Sustainable Growth Rate

The maximum growth rate a firm can achieve without having to finance growth with additional equity or debt.

Quebec Firm

Refers to a business organization that is registered or operates in Quebec, Canada, subject to provincial laws and regulations.

Equity Value

The value of a company’s shares; it represents the residual value to shareholders after debts and liabilities have been settled.

Sustainable Growth Rate

The maximum rate at which a company can grow its sales, earnings, and dividends without having to increase financial leverage or equity financing.