A Negative Net Present Value Indicates That the

question 14

Multiple Choice

A negative net present value indicates that the

• A) project is acceptable.
• B) wrong discount rate was used.
• C) project's annual rate of return exceeds the discount rate.
• D) present value of the cash inflows was less than the present value of the cash out flows.

---

Definitions:

Direct Write-off Method

A method of accounting for bad debts that involves charging unpaid invoices directly to the expense account when they are determined to be uncollectible.

Allowance Method

An accounting technique used to estimate uncollectible accounts receivable and record them as an expense.

Bad Debts

Money owed to a company that is considered irrecoverable and is written off as a loss.

Outstanding Balances

The total amount of money owed that has not yet been paid.