The Two Cardinal Rules Which Financial Analysts Follow to Avoid

question 8

True/False

The two cardinal rules which financial analysts follow to avoid capital budgeting errors are: (1) capital budgeting decisions must be based on accounting income, and (2) only incremental cash flows are relevant to accept/reject decisions.

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Definitions:

Auxiliary Section Housing

A casing that encloses the auxiliary section of a gearbox or transmission, providing structural support.

Seized Clutch Release Bearing

A condition where the clutch release bearing fails to function properly, often due to overheating or lack of lubrication, leading to clutch engagement issues.

Driveline Misalignment

A condition where components of the driveline, such as the transmission and differential, are not properly aligned, leading to increased wear or failure.

Transmission Output Yoke

The Transmission Output Yoke is a component that connects the transmission of a vehicle to the driveshaft, transferring power from the transmission to the wheels.