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Test Bank For Accounting Principles 15 th
Edition By Jerry Weygandt, Paul Kimmel, Jill Mitchell (All Chapters 1-27, 100% Original Verified, A+ Grade)
All Chapters Arranged Reverse:
27-1 This is The Original Test Bank For 15 th
Edition, All other Files in The Market are Fake/Old/Wrong Edition. 1 / 4
Accounting Principles, 15e (Weygandt) Chapter 27 Planning for Capital Investments 1) Capital budgeting decisions usually involve large investments and often have significant impacts on a company's future profitability.
Answer: TRUE
Diff: 1
LO: 1. Describe capital budgeting inputs and apply the cash payback technique.
Bloom/IFRS: K
AACSB/IMA: None/Investment Decisions
AICPA: BB: None; FC: Measurement Analysis and Interpretation; PC: None
Min.: 1
2) The capital budgeting committee ultimately approves the annual capital expenditure budget.
Answer: FALSE
Diff: 1
LO: 1. Describe capital budgeting inputs and apply the cash payback technique.
Bloom/IFRS: K
AACSB/IMA: None/Investment Decisions
AICPA: BB: None; FC: Measurement Analysis and Interpretation; PC: None
Min.: 1
3) For purposes of capital budgeting, estimated cash inflows and cash outflows are the preferred inputs for capital budgeting decision tools.
Answer: TRUE
Diff: 1
LO: 1. Describe capital budgeting inputs and apply the cash payback technique.
Bloom/IFRS: C
AACSB/IMA: None/Investment Decisions
AICPA: BB: None; FC: Measurement Analysis and Interpretation; PC: None
Min.: 1
4) The cash payback technique is a quick way to calculate a project's net present value.
Answer: FALSE
Diff: 1
LO: 1. Describe capital budgeting inputs and apply the cash payback technique.
Bloom/IFRS: C
AACSB/IMA: None/Investment Decisions
AICPA: BB: None; FC: Measurement Analysis and Interpretation; PC: None
Min.: 1
1 2 / 4
5) The cash payback period is computed by dividing the cost of the capital investment by the net annual cash flow.
Answer: TRUE
Diff: 1
LO: 1. Describe capital budgeting inputs and apply the cash payback technique.
Bloom/IFRS: K
AACSB/IMA: None/Investment Decisions
AICPA: BB: None; FC: Measurement Analysis and Interpretation; PC: None
Min.: 1
6) The cash payback method is frequently used as a screening tool but it does not take into consideration the profitability of a project.
Answer: TRUE
Diff: 1
LO: 1. Describe capital budgeting inputs and apply the cash payback technique.
Bloom/IFRS: C
AACSB/IMA: None/Investment Decisions
AICPA: BB: None; FC: Measurement Analysis and Interpretation; PC: None
Min.: 1
7) The cost of capital is a weighted average of the rates paid on borrowed funds as well as on funds provided by investors in the company's stock.
Answer: TRUE
Diff: 1
LO: 2. Use the net present value method.
Bloom/IFRS: K
AACSB/IMA: None/Investment Decisions
AICPA: BB: None; FC: Measurement Analysis and Interpretation; PC: None
Min.: 1
8) When the net present value method is used, a net present value of zero indicates that the project would not be acceptable.
Answer: FALSE
Diff: 1
LO: 2. Use the net present value method.
Bloom/IFRS: C
AACSB/IMA: None/Investment Decisions
AICPA: BB: None; FC: Measurement Analysis and Interpretation; PC: None
Min.: 1
2 3 / 4
9) The net present value method can only be used in capital budgeting if the expected cash flows from a project are an equal amount each year.
Answer: FALSE
Diff: 1
LO: 2. Use the net present value method.
Bloom/IFRS: C
AACSB/IMA: None/Investment Decisions
AICPA: BB: None; FC: Measurement Analysis and Interpretation; PC: None
Min.: 1
10) If intangible benefits are not considered, capital budgeting techniques might incorrectly eliminate projects that could be financially beneficial to the company.
Answer: TRUE
Diff: 1
LO: 3. Identify capital budgeting challenges and refinements.
Bloom/IFRS: K
AACSB/IMA: None/Investment Decisions
AICPA: BB: None; FC: Measurement Analysis and Interpretation; PC: None
Min.: 1
11) To avoid accepting projects that actually should be rejected, a company should ignore intangible benefits in calculating net present value.
Answer: FALSE
Diff: 2
LO: 3. Identify capital budgeting challenges and refinements.
Bloom/IFRS: C
AACSB/IMA: None/Investment Decisions
AICPA: BB: None; FC: Measurement Analysis and Interpretation; PC: None
Min.: 1
12) One way of incorporating intangible benefits into the capital budgeting decision is to project conservative estimates of the value of the intangible benefits and include them in the NPV calculation.
Answer: TRUE
Diff: 2
LO: 3. Identify capital budgeting challenges and refinements.
Bloom/IFRS: C
AACSB/IMA: None/Investment Decisions
AICPA: BB: None; FC: Measurement Analysis and Interpretation; PC: None
Min.: 1
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