An Advantage of the NPV Method Is That It Takes

question 7

Multiple Choice

An advantage of the NPV method is that it takes into account:

• A)the timing of the expected cash flows
• B)all of the expected cash flows
• C)only cash flows so it is not affected by changes to accounting rules and standards
• D)all of the options are advantages of the NPV method

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Definitions:

Percentage of Sales

A financial analysis tool used to forecast future expenses, based on a fixed percentage of the total sales.

Allowance for Doubtful Accounts

A contra asset account on a company's balance sheet that estimates the amount of receivables that may not be collected.

Credit Sales

Sales made by a business where the customer is allowed to pay at a later date.

Bad Debt Expense

A charge to the income statement for accounts receivable that a company has determined it will not collect.