Consider the Following Statements About Capital Budgeting Postaudits

question 2

Multiple Choice

Consider the following statements about capital budgeting postaudits:
I. Postaudits can be used to detect desirable projects that were rejected.
II. Postaudits can be used to detect undesirable projects that were accepted.
III. Postaudits may reveal shortcomings in cash-flow projections, providing insights that allow a company to improve future predictions.
Which of the above statements is (are) correct?

• A) I only.
• B) II only.
• C) III only.
• D) II and III.
• E) I, II, and III.

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Definitions:

Statement Of Cash Flows

A financial statement that consolidates information about all the money a company gets from its regular operations and outside investments, alongside the money spent on business operations and investments within a certain timeframe.

Investing Activities

Part of a company's cash flow statement that shows the amount of money spent or generated from various investment-related activities in non-current assets.

Contingent Activities

Actions or outcomes that are possible and might affect a project or transaction but their occurrence is dependent on future events.

Noncash Investing

Investing activities that do not involve immediate cash transactions, such as acquiring assets through the issuance of equity or exchanging one asset for another.