Using Accrual Accounting, Expenses Are Recorded and Reported Only

question 92

Multiple Choice

Using accrual accounting, expenses are recorded and reported only

• A) when they are incurred, whether or not cash is paid
• B) when they are incurred and paid at the same time
• C) if they are paid before they are incurred
• D) if they are paid after they are incurred

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Definitions:

NPV

Net Present Value, a method used in capital budgeting to determine the profitability of an investment or project by calculating the present value of expected cash flows versus initial cost.

Independent Projects

Investment opportunities that do not affect the cash flows or profitability of other projects considered by an entity.

Managerial Decision

The process by which management responds to opportunities and threats by analyzing options and making determinations about specific organizational goals and courses of action.

NPV

NPV (Net Present Value) is a calculation used to assess the profitability of an investment by discounting future cash flows back to their present value.