Which of the Following Statements Is Incorrect

question 155

Multiple Choice

Which of the following statements is incorrect?

• A) The further into the future a cash receipt is expected to occur, the lower is its present value.
• B) The return on investment measures the compensation a company expects to receive from investing in capital assets.
• C) Most companies use their cost of capital to estimate the minimum return on investment required from capital investments.
• D) When a company invests in capital assets, it sacrifices future dollars for the opportunity to receive present dollars.

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Definitions:

Average Cost

A method of inventory valuation which calculates the cost of goods sold and ending inventory based on the average cost of all similar items in inventory.

Ending Inventory

The total value of a company's merchandise, raw materials, and products left unsold at the end of an accounting period.