Which of the Following Is True About Canadian Governmental Reporting

question 7

Multiple Choice

Which of the following is true about Canadian governmental reporting standards?

• A)PSAB standards are recommendations only.
• B)PSAB standards are rules that must be followed.
• C)PSAB standards must be applied to all provincial public utilities.
• D)PSAB standards were developed by the OSC.

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Definitions:

Operating Leverage (DOL)

A financial metric indicating the proportion of fixed versus variable costs a company has, which affects its earnings before interest and taxes (EBIT) for every percentage change in sales.

Variable Cost

Costs that vary directly with the level of production or volume of output.

Fixed Costs

Constant expenses that do not change in relation to the level of production or sales.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the degree to which a firm can increase its profits by increasing sales.