Which of the Following Statements Regarding Capital Budgeting Decision Errors

question 63

Multiple Choice

Which of the following statements regarding capital budgeting decision errors is/are true?

• A) The consistent use of post-audits precludes an organisation from rejecting a desirable capital budgeting project.
• B) The post-audit helps to detect errors that occur when an undesirable capital budgeting project is accepted.
• C) The use of post-audits will not detect errors that occur when a desirable capital budgeting project is rejected.
• D) The post-audit helps to detect errors that occur when an undesirable capital budgeting project is accepted AND the use of post-audits will not detect errors that occur when a desirable capital budgeting project is rejected.

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Definitions:

Incentive

A stimulus or reward that motivates or encourages an individual to perform an action or exhibit a specific behavior.

Drive Reduction

A motivational theory that posits that people are motivated to take actions that reduce psychological needs and maintain homeostasis.

Instinctive

Pertains to the inherent inclinations and responses that organisms are born with.

Instinctual Drive

An innate, biological motivator that drives behavior and responses to achieve specific needs.