ACNT 2402Chapter 10 - Study Guide Questions and Answers(2022/2023)

Chapter 10, Differential Analysis: The Key to Decision Making True/False 1. Only future costs that differ between alternatives are relevant in decision making. Answer: T 2. Future costs that do not differ between the alternatives in a decision are avoidable costs. Answer: F 3. The book value of a machine, as shown on the balance sheet, is not relevant in a decision concerning the replacement of that machine by another machine. (Ignore taxes.) Answer: T 4. A cost that is relevant in one decision may not be relevant in another decision. Answer: T 5. Opportunity costs are not usually recorded in the accounts of a business. Answer: T 6. A cost that can be avoided by choosing one alternative over another is not relevant for decision purposes. Answer: F 7. The book value of old equipment is a relevant cost in a decision to replace that equipment. (Ignore taxes.) Answer: F 8. An avoidable cost is a cost that can be completely eliminated irrespective of whether one chooses one alternative or another in a decision. Answer: F