Ch21

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Unformatted text preview: Cost Accounting, 13e (Horngren et al.) Chapter 21 1 Capital Budgeting and Cost Analysis 1) Capital focuses on projects over their entire lives to consider all the cash flows or cash savings from investing in a single project. budgeting Answer: TRUE Diff: 2 Terms: capital budgeting Objective: 1 AACSB: Analytical skills 2) A capital budget spans only a one-year period. Answer: FALSE Explanation: A capital budget normally is for a period of time greater than one year. Diff: 2 Terms: capital budgeting Objective: 1 AACSB: Analytical skills 3) The identify projects stage of capital budgeting gathers information from all parts of the value chain to evaluate alternative projects. Answer: FALSE Explanation: This is the definition of the obtain information stage. Diff: 1 Terms: capital budgeting Objective: 2 AACSB: Analytical skills 4) The obtain information stage of capital budgeting gathers information from all parts of the value chain to evaluate alternative projects. Answer: TRUE Diff: 1 Terms: capital budgeting Objective: 2 AACSB: Analytical skills 5) The make by choosing among alternatives stage of the capital budgeting process consists of determining which investment yields the decisions greatest benefit and the least cost to the organization. Answer: TRUE Diff: 1 Terms: capital budgeting Objective: 2 AACSB: Analytical skills 6) The make s stage of the capital budgeting process consists of forecasting all potential net income additions that are attributable to the prediction alternative projects. Answer: FALSE Explanation: The make predictions stage of the capital budgeting process consists of forecasting all potential cash flows attributable to the alternative projects. Diff: 1 Terms: capital budgeting Objective: 2 AACSB: Analytical skills 7) The final the capital budgeting process is to obtain funding and make the investments identified in the make decisions by choosing activity in among alternatives stage of the process. Answer: FALSE Explanation: The implement decision, evaluate performance, and learn stage requires that after the funding is obtained and the inv...
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This note was uploaded on 09/18/2010 for the course ACCT 424 taught by Professor All during the Spring '10 term at DeVry Long Beach.

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