For Capital Budgeting and Cost of Capital Purposes,the Firm Should

question 24

True/False

For capital budgeting and cost of capital purposes,the firm should always consider retained earnings as the first source of capital (i.e. ,use these funds first)because retained earnings have no cost to the firm.

---

Definitions:

Accounting Measurements

The process of quantifying financial information in dollars or units to report financial position and performance.

Revenue Recognition

The accounting principle that deals with the conditions under which revenue is recognized and recorded on the financial statements.

Installment Method

An accounting method used to recognize revenue and expenses on long-term contracts and other sales where payment is received in installments.

Qualitative Characteristic

Features or attributes that describe the non-numeric aspects of goods, services, processes or information, often related to quality.