Question 1

Discounted cash flow methods focus on operating income.

Accepted Answer

A) True 
 B)False

Question 2

In the "make decisions by choosing among alternatives" stage of the capital budgeting process,a company determines which investment yields the greatest benefit and the least cost to the organization.

Accepted Answer

A) True 
 B)False

Question 3

A capital budgeting tool that management can use to summarize the difference in the future net cash inflows from an intangible asset at two different points in time is referred to as:

Accepted Answer

A)  the accrual accounting rate-of-return method 
B)  the net present value method 
C)  sensitivity analysis 
D)  the payback method 
A)  the accrual accounting rate-of-return method 
B)  the net present value method 
C)  sensitivity analysis 
D)  the payback method

Question 4

Which of the following is a limitation of AARR method?

Accepted Answer

A)  It is difficult to compare projects as its result is expressed in dollars and not in percentage terms. 
B)  It does not consider income earned throughout a project's expected useful life. 
C)  It does not track initial investment. 
D)  It does not consider time value of money. 
A)  It is difficult to compare projects as its result is expressed in dollars and not in percentage terms. 
B)  It does not consider income earned throughout a project's expected useful life. 
C)  It does not track initial investment. 
D)  It does not consider time value of money.

Question 5

Which of the following is a stage of the capital budgeting process that forecasts all potential cash flows attributable to the alternative projects?

Accepted Answer

A)  identify projects stage 
B)  make decisions by choosing among alternatives stage 
C)  implement the decision, evaluate performance, and learn stage 
D)  make predictions stage 
A)  identify projects stage 
B)  make decisions by choosing among alternatives stage 
C)  implement the decision, evaluate performance, and learn stage 
D)  make predictions stage

Question 6

Using capital budgeting techniques to track and (based on success to date)modify resource levels committed to staged R&D investments is called timed options.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following involves the process of making decisions for significant financial investments in projects to develop new products,expand production capacity,or remodel current production facilities?

Accepted Answer

A)  capital budgeting 
B)  working capital management 
C)  master budgeting 
D)  capitalization 
A)  capital budgeting 
B)  working capital management 
C)  master budgeting 
D)  capitalization

Question 8

In the net present value (NPV)method,pre-tax cash flows should be used instead of after-tax cash flows when taxes are a consideration.

Accepted Answer

A) True 
 B)False

Question 9

Midize Flower Company provides flowers and other nursery products for decorative purposes in medium to large sized restaurants and businesses.The company has been investigating the purchase of a new specially equipped van for deliveries.The van has a value of $66,645 with a seven-year life.The expected additional cash inflows are $15,000 per year.What is the internal rate of return?

Accepted Answer

A)  10% 
B)  13% 
C)  15% 
D)  20% 
A)  10% 
B)  13% 
C)  15% 
D)  20%

Question 10

In calculating the net initial investment cash flows,any increase in working capital required for the project should be included.

Accepted Answer

A) True 
 B)False

Question 11

Relevant cash flows are expected future cash flows that differ among the alternative uses of investment funds.

Accepted Answer

A) True 
 B)False

Discounted cash flow methods focus on operating income.

In the "make decisions by choosing among alternatives" stage of the capital budgeting process,a company determines which investment yields the greatest benefit and the least cost to the organization.

A capital budgeting tool that management can use to summarize the difference in the future net cash inflows from an intangible asset at two different points in time is referred to as:

Which of the following is a limitation of AARR method?

Which of the following is a stage of the capital budgeting process that forecasts all potential cash flows attributable to the alternative projects?

Using capital budgeting techniques to track and (based on success to date)modify resource levels committed to staged R&D investments is called timed options.

Which of the following involves the process of making decisions for significant financial investments in projects to develop new products,expand production capacity,or remodel current production facilities?

In the net present value (NPV)method,pre-tax cash flows should be used instead of after-tax cash flows when taxes are a consideration.

In calculating the net initial investment cash flows,any increase in working capital required for the project should be included.

Relevant cash flows are expected future cash flows that differ among the alternative uses of investment funds.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, direct-Cost Variances, and Management Control

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, just-In-Time, and Simplified Costing Methods

Management Control Systems, transfer Pricing, and Multinational Considerations

Performance Measurement, compensation, and Multinational Considerations

Filters

Exam 21: Capital Budgeting and Cost Analysis

Discounted cash flow methods focus on operating income.

In the "make decisions by choosing among alternatives" stage of the capital budgeting process,a company determines which investment yields the greatest benefit and the least cost to the organization.

A capital budgeting tool that management can use to summarize the difference in the future net cash inflows from an intangible asset at two different points in time is referred to as:

Which of the following is a limitation of AARR method?

Which of the following is a stage of the capital budgeting process that forecasts all potential cash flows attributable to the alternative projects?

Using capital budgeting techniques to track and (based on success to date)modify resource levels committed to staged R&D investments is called timed options.

Which of the following involves the process of making decisions for significant financial investments in projects to develop new products,expand production capacity,or remodel current production facilities?

In the net present value (NPV)method,pre-tax cash flows should be used instead of after-tax cash flows when taxes are a consideration.

In calculating the net initial investment cash flows,any increase in working capital required for the project should be included.

Relevant cash flows are expected future cash flows that differ among the alternative uses of investment funds.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, direct-Cost Variances, and Management Control

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, just-In-Time, and Simplified Costing Methods

Management Control Systems, transfer Pricing, and Multinational Considerations

Performance Measurement, compensation, and Multinational Considerations

Filters