Which of the Following Statements Is NOT a Disadvantage of the Regular

question 31

Multiple Choice

Which of the following statements is NOT a disadvantage of the regular payback method?

• A) ignores cash flows beyond the payback period.
• B) does not directly account for the time value of money.
• C) does not provide any indication regarding a project's liquidity or risk.
• D) does not take account of differences in size among projects.
• E) lacks an objective, market-determined benchmark for making decisions.

Understand the implications of different exchange rate quotations (direct and indirect) in financial reporting.

Understand the concepts of foreign exchange and the types of foreign exchange hedging tools.

Calculate the cost and impact of foreign currency transactions on financial statements.

Distinguish between different hedging strategies: fair value hedges, cash flow hedges, and speculative transactions.

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Definitions:

Discount Period

The timeframe within which a buyer can make payment less a discount for early settlement, encouraging quicker payment from customers.

Operating Expense Section

A part of the income statement that lists expenses related to the day-to-day operations of a business, excluding the cost of goods sold.

Wholesaler

An intermediary entity in the distribution channel that buys goods in bulk from manufacturers and sells them to retailers or other businesses, but not directly to consumers.

Contra Account

A contra account is an account used in the general ledger to reduce the value of a related account when the two are netted together.