Which of the Following Statements Is Correct

question 33

Multiple Choice

Which of the following statements is correct?

• A) Regardless of our preferences for cash today versus cash in the future, we should always maximize benefits first. We can then borrow or lend to shift cash flows through time and find our most preferred pattern of cash flows.
• B) Regardless of our preferences for cash today versus cash in the future, we should always maximize present value first. We can then borrow or lend to shift cash flows through time and find our most preferred pattern of cash flows.
• C) Regardless of our preferences for cash today versus cash in the future, we should always maximize net present value first. We can then borrow or lend to shift cash flows through time and find our most preferred pattern of cash flows.
• D) Regardless of our preferences for cash today versus cash in the future, we should always minimize the cost first. We can then borrow or lend to shift cash flows through time and find our most preferred pattern of cash flows.

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Definitions:

Internal Control

The processes and procedures implemented by an organization to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.

Budgeting Process

The activity of preparing a detailed financial plan for achieving the financial and operational goals of an organization.

Prime Costs

The combined costs of direct materials and direct labor that are directly attributable to the production of goods.

Production Budget

A Production Budget is an estimate of the number of units that must be manufactured to meet sales goals and, therefore, it details the cost of raw materials, labor, and other resources necessary for production.