Which of the Following Capital Budgeting Methods Focuses on Net

question 32

Multiple Choice

Which of the following capital budgeting methods focuses on net income rather than cash flows?

• A)Payback period
• B)Accounting rate of return
• C)Net present value
• D)Internal rate of return

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Definitions:

Debit Balance

An accounting entry that represents a situation where debits are greater than credits in an account, often indicating assets or expenses.

Allowance for Doubtful Accounts

A contra-asset account that reduces the total receivables balance to reflect accounts that may not be collectible.

Analysis of Receivables Method

An accounting method used to estimate the amount of receivables that will not be collected based on historical data and trends.

Direct Write-off Method

An accounting practice where uncollectible accounts receivable are written off to expense only when they are determined to be non-recoverable.