Use the Information for the Question(s) Below

question 52

Multiple Choice

Use the information for the question(s) below.

-If WiseGuy Inc. uses IRR rule to choose projects, which of the projects (Project A or Project B) will rank highest?

• A) Project A
• B) Project B
• C) Project A and Project B have the same ranking.
• D) Cannot calculate a payback period without a discount rate.

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Definitions:

Horizontal Analysis

A financial analysis technique that compares historical financial data over a series of reporting periods, using a base year as a comparison.

Vertical Analysis

A method of financial statement analysis in which each entry for each of the three major categories of accounts (assets, liabilities, and equities) in a balance sheet is represented as a proportion of the total account.

Percentage Analysis

A financial analysis technique that evaluates the proportion or percentage change of individual components in financial statements over time.

Adjusting Entry

Accounting records created at the closing of a fiscal period to distribute expenses and revenues to the time they were truly incurred.