Ageing Schedules Are flAwed Because They

question 46

Multiple Choice

Ageing schedules are flawed because they:

• A)do not identify specific customers.
• B)show the percent of accounts that are past due.
• C)only give the yearly or periodic average of account age.
• D)show the amounts that are past due.
• E)All of the above.

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Definitions:

Net Present Value

A method used in capital budgeting to evaluate the profitability of an investment by calculating the difference between the present value of cash inflows and outflows.

Working Capital

The distinction between a corporation's short-term assets and liabilities, showing the available capital for operational purposes.

Fast-Food Chain

A series of restaurants serving food quickly and standardized in method and by the same brand name.

Payback Period

The length of time required to recover the cost of an investment or to reach the break-even point.