What is an opportunity cost and why is it a relevant cost?
An opportunity cost is not a "cost" in the traditional out-of-pocket sense. Opportunity costs are benefits that are sacrificed to pursue one alternative rather than another. Once an alternative is selected, the opportunity costs associated with that alternative will not appear directly in the accounting records of the firm as other costs of that alternative will. These costs are, however, relevant because the company is giving up one set of benefits to accept a second set. Rational decision making assumes that the chosen alternative provides the greater benefit.
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The manager of a revenue center has control over:
A) profit and investment decisions. B) revenues and costs. C) revenues only. D) revenues and profit
Which of the following is not a characteristic of e-teams?
A. Most of the interactions among members of e-teams occur through electronic communication channels. B. E-teams generally perform simple tasks. C. E-team members either work in geographically separated workplaces or may work in the same space but at different times. D. E-teams may have members working in different spaces and time zones.
An increasingly diverse cultural base in the United States means that marketers face increasingly diverse consumer markets.
Answer the following statement true (T) or false (F)
An audit engagement team is planning for the upcoming audit of a client who recently underwent a significant restructuring of its debt. The restructuring was necessary as economic conditions hampered the client’s ability to make scheduled re-payments of its debt obligations. The restructured debt agreements included new debt covenants. In auditing the debt obligation in the prior year (before
the restructuring), the team established materiality specific to the financial statement debt account (account level materiality) at a lower amount than overall financial statement materiality. In planning the audit for the current year, the team plans to use a similar materiality level. While such a conclusion might be appropriate, what judgment trap(s) might the team fall into and which step(s) in the judgment process are most likely affected? What will be an ideal response?