The Reconciliation Between Budgeted Profit and Actual Profit Can Be

question 65

Multiple Choice

The reconciliation between budgeted profit and actual profit can be summarised as:

• A)budgeted profit minus all favourable variances plus all adverse variances equals actual profit.
• B)actual profit plus all favourable variances plus all adverse variances equals budgeted profit.
• C)actual profit plus all favourable variances minus all adverse variance equals budgeted profit.
• D)budgeted profit plus all favourable variances minus all adverse variance equals actual profit.

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Definitions:

Net Advantage

An evaluation metric that identifies the benefits minus the costs of pursuing a specific action or investment.

Depreciation Tax Shield

A tax reduction achieved through deducting depreciation expenses, lowering taxable income.

Straight-Line Method

A method of calculating depreciation of an asset, which assumes the asset will lose an equal amount of value each year over its useful life.

CCA Rate

The Capital Cost Allowance rate, which is used for tax purposes to determine the yearly depreciation expense that can be claimed on tangible and intangible assets.