Net Present Value Method Is a Capital Budgeting Technique That

question 2

Multiple Choice

Net present value method is a capital budgeting technique that helps to minimize some of the shortcomings of the payback method by

• A) discounting all future projects.
• B) recognizing past cash flows of projects.
• C) recognizing future cash flows beyond the payback period.
• D) recognizing the payback dollars over again.

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Definitions:

Temporary Accounts

These include accounts that are closed at the end of each accounting period, including income, expense, and withdrawal accounts.

Carried Forward

The act of transferring a balance from one period to the next on financial statements or ledgers.

Owners' Equity

The total value belonging to the owners of a company, calculated as the company's total assets minus its total liabilities, indicative of the net worth.

Net Worth

The total value of an individual's or organization's assets minus liabilities, representing the financial health or value of the entity.