Which of the Following Is True Regarding the Profitability Index

question 28

Multiple Choice

Which of the following is true regarding the profitability index?

• A)It does not use the net present value (NPV)to assess benefits.
• B)It is unreliable when used for choosing between different projects.
• C)It is very simple to compute.
• D)Attention must be taken when using it to make sure that all of the constrained resource is used.

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Definitions:

Credit

An entry recording an increase in liabilities or equity, or a decrease in assets, reflecting the business transactions' effects on the accounts.

Merchandise

Goods that are bought and sold in the course of business, typically in a retail or wholesale environment.

Credit

An entry on the right side of an accounting ledger representing an increase in liabilities or income, or a decrease in assets or expenses.

Contra Accounts

Accounts used to offset or reduce the balance of another account, usually appearing on the balance sheet.