Changing from Straight Line to Reducing Balance Depreciation in One

question 64

Multiple Choice

Changing from straight line to reducing balance depreciation in one year, then back to straight line in the next, and then back again to reducing balance, is a violation of the qualitative characteristic of:

• A) relevance.
• B) materiality.
• C) comparability.
• D) timeliness.

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Definitions:

Two-Variance Analysis

An analytical technique in managerial accounting where variances between expected and actual performance are divided into a volume variance and a rate or efficiency variance.

Overhead Controllable

Expenses incurred in the running of a business that management can directly influence or control, such as supplies and advertising.

Overhead Volume

Overhead Volume refers to the level of overhead costs that correlate with the level of production or activity in a company.

Variance Reports

Reports that analyze the difference between planned figures and actual figures for a particular metric, helping management understand performance discrepancies.