An Assumption About Cost Flow Is Used

question 186

Multiple Choice

An assumption about cost flow is used

• A)because it is required by the income tax regulation.
• B)even when there is no change in the purchase price of inventory.
• C)only when the flow of goods cannot be determined.
• D)because prices usually change, and tracking which units have been sold is difficult.

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Definitions:

Desired Rate of Return

The minimum profit level that investors expect from an investment, influencing their decision to invest.

Future Cash Flows

Estimates of the amount of money expected to be received or paid out by a business in future periods.

Internal Rate of Return

A metric used in financial analysis to estimate the profitability of potential investments, calculated as the rate of return that makes the net present value of all cash flows equal to zero.

Present Value

The current valuation of a future sum of money or cash flows, when evaluated at a given rate of return.