Budgets and Performance Reports Should Be Developed on the Basis

question 23

Multiple Choice

Budgets and performance reports should be developed on the basis of

• A) responsibility accounting.
• B) generally accepted accounting principles.
• C) financial accounting standards.
• D) managerial accounting standards.

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Definitions:

Project Cash Flows

The net amount of cash that is generated or expended by a particular project or investment, after accounting for all inflows and outflows.

Project Profitability Index

The ratio of the net present value of a project’s cash flows to the investment required.

Net Present Values

refers to the calculation that determines the present value of a series of future cash flows by discounting them at a certain rate, often used for assessing the profitability of investments.

Incremental Cost Approach

An analysis method that evaluates the additional costs of making decisions, comparing the costs that change with the decision versus those that do not change.