Which of the Following Capital Budgeting Methods Uses Accrual Accounting

question 147

Multiple Choice

Which of the following capital budgeting methods uses accrual accounting income?

• A)Payback method
• B)Accounting rate of return method
• C)Net present value method
• D)Internal rate of return method

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Definitions:

Direct Method

In cash flow reporting, this accounting method lists major cash inflows and outflows directly, showing the exact sources and uses of cash during the reporting period.

Gain on Sale

The financial benefit realized when selling an asset for more than its book value or cost basis.

Operating Activities

Activities directly related to the day-to-day operations of a business, including revenue and expense transactions affecting net income.

Operating Activities

Activities that relate directly to the primary operations of the company, such as manufacturing, distributing, marketing, and selling a product or service.