You Are Analyzing a Project and Have Prepared the Following

question 16

Multiple Choice

You are analyzing a project and have prepared the following data: Based on the payback period of _____ years for this project, you should _____ the project.

• A) 3.27; accept
• B) 3.27; reject
• C) 3.42; accept
• D) 3.42; reject
• E) 3.51; reject

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Definitions:

Direct Method

A method for allocating service department costs directly to producing departments without intermediate allocations among service departments.

Operating Activities

Activities that are directly related to the running of a business and the production of its goods and services, affecting the company's cash flow.

Direct Method

In financial accounting, refers to a way of allocating service department costs directly to producing departments without intermediate allocations.

Cash Basis

A bookkeeping practice in which income and outgoings are documented at the point of actual transaction, instead of when they are accrued.