Which of the Following Statements Is Most Correct

question 43

Multiple Choice

Which of the following statements is most correct?

• A) Depreciation is included in the estimate of cash flows (Cash flow = Net income + Depreciation); hence, depreciation is set forth on a separate line in the cash budget.
• B) If cash inflows from collections occur in equal daily amounts but most payments are made regularly on the 10th of each month, then it is not necessary to use a daily cash budget. A cash budget focused on the end of the month will suffice.
• C) Sound working capital policy is designed to maximize the time between cash expenditures on materials and the collection of cash on sales.
• D) None of the statements above is correct.

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Definitions:

Significant

Sufficiently great or important to be worthy of attention; noteworthy.

Self-Serving Bias

A common cognitive bias that causes individuals to see things in a way that favors themselves, often by attributing successes to personal skill and failures to external factors.

Probability

The measure of the likelihood that an event will occur, expressed as a number between 0 and 1.

Control

In experiments, the standard to which comparisons are made by keeping all variables constant except the one being tested.