Large Favourable Variances Between Actual and Planned Performance May Indicate

question 56

Multiple Choice

Large favourable variances between actual and planned performance may indicate:

• A) that actual expenses were higher than budgeted expenses.
• B) that the firm must be operating efficiently.
• C) budget income targets may need to be revised upwards in the future.
• D) that actual income was too high and should be revised downwards in the future.

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Definitions:

Land

A fixed asset that represents property; it is considered a non-depreciable asset used in operations or investment.

Investment by Owner

The contribution of cash or other assets by an owner into their business, increasing the equity of the company.

Deficit

The amount by which expenses surpass income or revenues, resulting in a loss.

Retained Earnings

Profits that a company has reinvested in itself rather than paying out to shareholders as dividends.