A Capital Budgeting Tool That Management Can Use to Summarize

question 143

Multiple Choice

A capital budgeting tool that management can use to summarize the difference in the future net cash inflows from an intangible asset at two different points in time is referred to as:

• A) the accrual accounting rate-of-return method
• B) the net present value method
• C) sensitivity analysis
• D) the payback method

---

Definitions:

Financial Statements

Formal records of the financial activities and position of a business, person, or other entity, typically including a balance sheet, income statement, and cash flow statement.

Closing Entries

Journal entries made at the end of an accounting period to transfer temporary account balances to permanent accounts.

General Ledger

A complete record of all financial activities conducted by a company throughout its existence.

Post-closing Trial Balance

A financial statement listing all accounts and their balances after closing entries are made, ensuring that debits equal credits.