Which of the Following Statements Is CORRECT

question 23

Multiple Choice

Which of the following statements is CORRECT?

• A) one defect of the irr method versus the npv is that the irr does not take account of the time value of money.
• B) one defect of the irr method versus the npv is that the irr does not take account of the cost of capital.
• C) one defect of the irr method versus the npv is that the irr values a dollar received today the same as a dollar that will not be received until sometime in the future.
• D) one defect of the irr method versus the npv is that the irr does not take proper account of differences in the sizes of projects.
• E) one defect of the irr method versus the npv is that the irr does not take account of cash flows over a project's full life.

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Definitions:

Temporary Accounts

Accounts used to record transactions for only a single accounting period, which are then reset or closed at the period's end, such as revenues, expenses, and dividends.

Supplies

Items used in the operation of a business that are not directly related to the production of goods or services, such as office supplies.

Prepaid Expenses

Payments made in advance for goods or services that will be received in the future.

Retained Earnings

The portion of a company's profits that is not distributed to shareholders as dividends but is instead reinvested in the business or held as a reserve.