Explanation

• Federalism divides powers between different levels of government.
• The national government handles broader national matters.
• State or local governments manage matters within their jurisdiction.
• This division helps distribute administrative responsibilities.

Explanation

• In accounting, an economic event occurs when a transaction is recognized and recorded
• Because it has a measurable monetary impact on the financial position of a business, changing its assets, liabilities, or equity.
• Types of Economic Events
• External Transactions
• Internal Events

Explanation

• Management science supports decision-making.
• It uses quantitative techniques.
• It may combine management, accounting, and econometric concepts.
• It helps solve complex organizational problems.

Explanation

• PI measures investment profitability.
• PI = PV of future cash flows ÷ Initial investment.
• PI of 0.9 is less than 1.
• It generally indicates the investment is not acceptable

Explanation

• The normal balance of a liability account is a credit.
• Recorded on the credit (right) side
• Decrease (-): Recorded on the debit (left) side.
• Common Examples: Accounts payable, loans payable, and accrued expenses.

Explanation

• The natural (or normal) balance of a revenue account is a credit.
• Revenue increases with a credit.
• Revenue decreases with a debit.
• Revenue is reported on the income statement.

Explanation

• Production decision is NOT a primary responsibility of a Financial Manager.
• Financial managers mainly deal with investment, financing, and dividend decisions.
• Production decisions are generally handled by production/operations management.

Last verified on 14-08-2026

Explanation

• Tone at the Top refers to the ethical values and attitudes established by top leadership.
• It reflects how senior management demonstrates integrity, ethics, and commitment to proper conduct.
• These values influence the behavior and culture of employees throughout the organization.

Last verified on 14-08-2026

Explanation

• The life of a business is divided into Accounting Periods.
• An accounting period is a specific period for which a business records and reports its financial activities.
• Common accounting periods include monthly, quarterly, and annually.
• This concept helps determine the business's profit or loss for a particular period.

Last verified on 14-08-2026

Explanation

• If the tax rate changes during a tax period, the taxpayer will file separate returns for the periods before and after the change.
• The transactions before the change are dealt with under the previous tax rate.
• Transactions after the change are dealt with under the new tax rate.
• This ensures the correct tax rate is applied to each relevant period.

Last verified on 14-08-2026