COST ACCOUNTING
CAPITAL BUDGETING
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
Which of the following statements is false about long-term assets?
|
|
Long-term assets are committed for extended periods of time.
|
|
|
Acquiring long-term assets creates significant financial risks for organizations.
|
|
|
Acquiring long-term assets creates technological risks for organizations.
|
|
|
Flexible budgeting is the primary tool that planners use in evaluating the financial desirability of long-term assets.
|
Explanation:
Detailed explanation-1: -Capital budgeting is used by companies to evaluate major projects and investments, such as new plants or equipment. The process involves analyzing a project’s cash inflows and outflows to determine whether the expected return meets a set benchmark.
Detailed explanation-2: -It does not include sunk costs.
Detailed explanation-3: -The correct option is ii. inventory level.
Detailed explanation-4: -Accrual principle is not followed in capital budgeting.
There is 1 question to complete.