Browse topic-based Business Management practice sets.
4894 practice sets · Page 227 of 245
What is the accounting rate of return (ARR)?
The average annual accounting profit from an investment divided by the initial investment
The length of time it takes for an investment to generate enough cash to recover its initial cost
The present value of future cash flows
The net present value of an investment
What is the payback period?
The length of time it takes for an investment to generate enough cash to recover its initial cost
The rate of return on an investment
The present value of future cash flows
The net present value of an investment
What is a capital budgeting decision?
A decision that involves the acquisition or disposal of long-term assets
A decision that involves short-term investments
A decision that involves the level of inventory to maintain
A decision that involves the level of accounts receivable to allow
What is the primary purpose of budgeting?
To control costs
To plan for future operations
To evaluate past performance
To secure financing
What is rolling budget?
A budget that is continuously updated
A budget that is based on a single level of activity
A budget that is used for long-term planning
A budget that is never revised
What is participative budgeting?
A budgeting approach that involves participation from all levels of the organization
A budgeting approach where budgets are developed by senior management
A budgeting approach that is based on historical data
A budgeting approach that is used for short-term planning
What is a bottom-up budgeting approach?
A budgeting approach where senior management sets overall budget targets
A budgeting approach where budgets are developed by individual departments
A budgeting approach that involves participation from all levels of the organization
A budgeting approach that is based on historical data
What is a top-down budgeting approach?
A budgeting approach where senior management sets overall budget targets
A budgeting approach where budgets are developed by individual departments
A budgeting approach that involves participation from all levels of the organization
A budgeting approach that is based on historical data
What is an unfavorable variance?
A variance that is better than the budgeted amount
A variance that is worse than the budgeted amount
A variance that is equal to the budgeted amount
A variance that is not significant
What is a favorable variance?
A variance that is better than the budgeted amount
A variance that is worse than the budgeted amount
A variance that is equal to the budgeted amount
A variance that is not significant
What is variance analysis?
The process of comparing actual results to budgeted results
The process of developing a budget
The process of revising a budget
The process of communicating a budget
What is a zero-based budget?
A budget that starts from zero each period
A budget that is based on historical data
A budget that is used for long-term planning
A budget that is never revised
What is a static budget?
A budget that is based on a single level of activity
A budget that adjusts for changes in activity levels
A budget that is used for long-term planning
A budget that is never revised
What is a flexible budget?
A budget that adjusts for changes in activity levels
A budget that is based on historical data
A budget that is used for long-term planning
A budget that is never revised
What is a budget?
A financial plan for a future period
A historical record of financial performance
A statement of a company's financial position
A report on a company's cash flows
The bias where investors favor information that supports their pre-existing beliefs is called:
Confirmation Bias
Representativeness Bias
Hindsight Bias
Availability Bias
The tendency to follow the crowd or take actions that others are taking is known as:
Herding Effect
Anchoring Bias
Disposition Effect
Loss Aversion
The phenomenon where individuals overestimate their ability to predict outcomes is known as:
Overconfidence Bias
Anchoring Bias
Confirmation Bias
Mental Accounting
Which of the following refers to the tendency of individuals to make decisions based on irrelevant information?
Framing Effect
Representativeness Heuristic
Sunk Cost Fallacy
Availability Bias
Which theory suggests that investors cannot process all information and therefore make decisions based on limited data?
Prospect Theory
Efficient Market Hypothesis
Bounded Rationality
Behavioral Portfolio Theory
