Which Capital Budgeting Method Uses Accrual Accounting,rather Than Net Cash

question 73

Multiple Choice

Which capital budgeting method uses accrual accounting,rather than net cash flows,as a basis for calculations?

• A) payback
• B) accounting rate of return
• C) net present value
• D) internal rate of return

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Definitions:

Present Value

The value today of a future money sum or cash flow stream, determined by a specified return rate.

Cash Flows

The comprehensive sum of cash being moved into and away from a business, critically impacting its financial agility.

Financial Calculator

A specialized calculator designed to perform financial functions including interest rates, payments, investment value calculations, and other financial metrics.

Present Value

The current equivalent value of a future stream of payments or a single financial sum, using a specific return rate.