GK
ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Merger
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Inventory level
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Expansion programme
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Replacement of an asset
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Detailed explanation-1: -The correct option is ii. inventory level.
Detailed explanation-2: -Capital budgeting helps in making the most optimal decisions. It includes expansion programs, merger decisions, replacement decisions but will not comprise of the inventory related decision making.
Detailed explanation-3: -Conversely, non-cash expenses like depreciation are not included in capital budgeting (except to the extent they impact tax calculations for “after tax” cash ows) because they are not cash transactions.
Detailed explanation-4: -Answer and Explanation: The correct answer is b. deciding whether or not to open a new store.
Detailed explanation-5: -Capital budgeting is the process by which investors determine the value of a potential investment project. The three most common approaches to project selection are payback period (PB), internal rate of return (IRR), and net present value (NPV).