Performance Measurement in Accounting Flashcards
7 cards from real Financial Management for Project Managers practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Performance Measurement in Accounting flashcards as text
A project manager is evaluating two mutually exclusive projects. Project A has an NPV of $80,000 and Project B has an NPV of $120,000. Which should be selected if budget allows only one?
Answer: Project B, because it has the higher NPV
When choosing between mutually exclusive projects, the one with the higher NPV creates the most organizational value.
In cost accounting, what distinguishes a 'sunk cost' from other project costs?
Answer: It has already been incurred and cannot be recovered regardless of future decisions
Sunk costs are past expenditures that are irrelevant to future decision-making because they cannot be recovered.
A project's SPI is 0.85 and CPI is 0.90. Which corrective action addresses BOTH underperformance indicators simultaneously?
Answer: Crash the schedule using overtime while identifying cost reduction opportunities
Crashing with simultaneous cost controls can improve both schedule (SPI) and cost (CPI) performance concurrently.
Which depreciation method allocates cost evenly over an asset's useful life and is simplest to apply for project accounting?
Answer: Straight-line depreciation
Straight-line depreciation divides cost minus salvage value equally across all years of useful life.
A control account in Earned Value Management is best described as:
Answer: A management control point where scope, schedule, and budget are integrated and performance is measured
Control accounts are management control points in the WBS where EVM integrates scope, schedule, and cost for measurement.
A project manager is told TCPI based on EAC is 1.12. What does this tell the project team?
Answer: The team must spend future dollars 12% more efficiently than historically achieved
TCPI > 1.0 means remaining work must be completed more efficiently than past performance to meet the revised forecast.
An activity-based costing (ABC) system differs from traditional cost accounting primarily because it:
Answer: Assigns overhead costs based on the activities that actually consume resources
ABC traces overhead to activities and then to cost objects, providing more accurate cost information than a single overhead rate.