When Companies Develop Cost Management Systems,which of the Following Purposes

question 131

Multiple Choice

When companies develop cost management systems,which of the following purposes of cost allocation usually dominates?

• A) to predict the economic effects of strategic and operational control decisions
• B) to provide the desired motivation and to give feedback for performance evaluation
• C) to compute income and asset valuations for financial reporting
• D) to justify costs or obtain reimbursement

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Definitions:

Interest Rate Risk

The potential for loss due to a change in interest rates affecting investment values or borrowing costs.

Time To Maturity

The remaining life of a debt instrument, at the end of which the principal is usually repaid.

Coupon Rate

The annual interest rate paid by a bond relative to its face value, expressed as a percentage.

Put Provision

An option clause in a bond or preferred stock allowing the holder to sell back the security to the issuer at a predetermined price before maturity.