Discuss the advantages and disadvantages of using executive judgment in forecasting company sales.
What will be an ideal response?
Executive judgment is the intuition of one or more executives. This is an unscientific but expedient and inexpensive approach to sales forecasting. It is not a very accurate method, but executive judgment may work reasonably well when product demand is relatively stable and the forecaster has years of market-related experience. However, because intuition is heavily influenced by recent experience, the forecast may weight recent sales booms or slumps excessively. Another drawback to intuition is that the forecaster has only past experience as a guide for deciding where to go in the future.
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The Tax Court strictly follows the precedent of prior decisions of the Court of Appeals for a particular circuit when:
A. the taxpayer requests it to do so. B. the IRS requests it to do so. C. the taxpayer resides in the United States. D. the taxpayer resides in that circuit.
If 10-year T-bonds have a yield of 6.2%, 10-year corporate bonds yield 8.5%, the maturity risk premium on all 10-year bonds is 1.3%, and corporate bonds have a 0.4% liquidity premium versus a zero liquidity premium for T-bonds, what is the default risk premium on the corporate bond?
A. 1.90% B. 2.09% C. 2.30% D. 2.53% E. 2.78%
It is necessary to distinguish between capital and revenue expenditures because of which of the following accounting rules or principles?
A) Matching B) Full disclosure C) Materiality D) Consistency
Which of the following is/are not true regarding maintenance?
a. Maintenance includes routine costs such as for cleaning and adjusting. b. Maintenance includes the costs of restoring an asset's service potential after breakdowns or other damage. c. Maintenance does not extend the estimated service life or increase its productive capacity of an asset beyond original expectations. d. U.S. GAAP and IFRS treat maintenance expenditures as expenses of the period when the firm makes the expenditure. e. Distinguishing repairs from maintenance is difficult but typically not necessary because expenditures for both are period expenses.