An Advantage of EVA, as Compared to Accounting Measures of Net

question 39

True/False

An advantage of EVA, as compared to accounting measures of net income, is that EVA accounts for the cost of capital.

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Definitions:

Deferrals

Adjusting entries for either prepaid expenses or unearned revenues.

Asset's Cost

The original financial value of an asset, including purchase price and any expenses incurred to get the asset ready for use.

Expired

Refers to resources or benefits that have been fully used and cannot contribute to future operations.

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenses to the period in which they actually occurred.