In Order to Be Useful to Managers, Management Accounting Reports

question 134

Multiple Choice

In order to be useful to managers, management accounting reports should possess all of the following characteristics EXCEPT:

• A) provide objective measures of past operations and subjective estimates about future decisions
• B) be prepared in accordance with generally accepted accounting principles
• C) be provided at any time management needs information
• D) be prepared to report information for any unit of the business to support decision making

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Definitions:

Fair Value

An estimated market value of an asset or liability, based on the assumption of a transaction between willing parties in an arm's length transaction.

Goodwill

An intangible asset that arises when a business is acquired for more than the fair value of its net identifiable assets, representing factors such as reputation, brand, and customer relationships.

Entity Method

A consolidation approach where investments are recorded at the purchase cost, adjusted for the parent company's share in the subsidiary's post-acquisition profits or losses.

Gross Margin

A company's revenue minus its cost of goods sold, divided by revenue, expressed as a percentage, indicating the percentage of revenue that exceeds the cost of goods sold.