Which of the Following Is an Objective of Capital Budgeting

question 4

Multiple Choice

Which of the following is an objective of capital budgeting?

• A)To eliminate all risk.
• B)To discount all future and past cash flows.
• C)To earn a satisfactory return on investment.
• D)To reverse past decisions.
• E)To reduce the number of investment activities.

---

Definitions:

Direct Method

A technique used in cash flow statements to present cash activities directly related to operating activities.

Investing Adjustments

Adjustments made in the accounting records related to investments in securities or fixed assets to reflect their fair values as of the financial statement date.

Indirect Method

An accounting practice used to prepare the cash flow statement, where net income is adjusted for non-cash transactions and changes in working capital to calculate cash flow from operating activities.

Net Income

The total revenue minus total expenses, representing the company's profit.