Accounting Cengage practice problems – Flashcards

Which of the following statements about decision-making is true? a. Sunk costs should usually be taken into account. b. Risk should not be taken into account. c. Opportunity cost should be considered. d. Objectives should be quantitative and not qualitative.

Relevant costs are costs that:

a. Must follow GAAP b. Focused on past performance c. Timeliness is critical d. Emphasizes reporting on the whole company e. Information is often less precise f. Future orientation g. Information is often "old" h. Reports results by segments i. Highly customizable

a. These managers make decisions about how to raise capital as well as where and how it is invested. b. These managers need to know how much a product costs in order to help establish a reasonable selling price. c. These managers support other managers by recruiting and staffing, designing compensation and benefit packages, and providing training and development opportunities for employees. d. These managers make decisions about how and when products and services are produced or provided.

Mary Ann is trying to decide whether to fly to Florida or New York. The cost of her ticket will be the same either way. The cost of the ticket is an example of:

Which of the following would be an irrelevant cost? a. Benefits foregone by choosing one alternative over another. b. Costs that are avoidable. c. Future costs that differ among alternatives. d. Costs that have already been incurred.