Advantages of Using Simulation Include

question 153

Multiple Choice

Advantages of using simulation include

• A) adjustment for risk in the resulting distribution of net present values.
• B) a range of possible outcomes presented.
• C) is good only for single period investments since discounting is not possible.
• D) graphically displays all possible outcomes of the investment.

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Definitions:

Operating Cycle

The operating cycle is the duration of time it takes for a company to purchase inventory, sell it, and convert the sales into cash.

Cash

A form of liquid asset that represents immediate purchasing power and can be used for transactions.

Closing Entries

Journal entries made at the end of an accounting period to transfer temporary accounts' balances to permanent accounts, thereby resetting the temporary accounts for the next period.

Revenue Accounts

Accounts that track the income a company generates from its normal business activities, such as sales of goods or services.