Sebastian Is Presenting a Capital Budgeting Project to Viola, His

question 33

Multiple Choice

Sebastian is presenting a capital budgeting project to Viola, his division manager. Which one of the following is likely to have the least amount of bias when evaluating this project?

• A) Sebastian
• B) Viola
• C) The company's accountant
• D) Cannot be determined

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Definitions:

Factoring Fee Expense

A cost incurred by a business when it sells its accounts receivable to a third party (the factor) at a discount.

Accounts Receivable

Funds that clients or customers owe to a company for products or services that have been provided but not yet compensated for.

Necessary Cash

The minimum amount of cash required by a company to carry out its day-to-day operations.

Contra Asset Account

An account on a company's balance sheet representing deductions from the gross amount of an asset, such as accumulated depreciation on fixed assets.