In calculating Net Present Value (NPV), which one of the following is not an example of a relevant cashflow: A Incremental Operating Costs B Initial investment (including installation costs) C Depreciation D Increased working capital (current assets (cash, receivable and inventories less current liabilities)
In calculating Net Present Value (NPV), which one of the following is not an example of a relevant cashflow: A Incremental Operating Costs B Initial investment (including installation costs) C Depreciation D Increased working capital (current assets (cash, receivable and inventories less current liabilities)
Chapter7: Budgeting
Section: Chapter Questions
Problem 5MC: Which approach requires management to justify all its expenditures? A. bottom-up approach B....
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Question
In calculating Net Present Value (NPV), which one of the following is not an example of a relevant cashflow:
A
Incremental Operating Costs
B
Initial investment (including installation costs)
C
Depreciation
D
Increased working capital (current assets (cash, receivable and inventories less current liabilities)
Question 2
Which of the following best describes a ‘basic standard’ with respect to costs in a budgeting exercise?
A A standard which assumes an efficient level of operation, but which includes allowances for factors such as normal loss, waste and machine downtime
B A standard which is kept unchanged over a period of time
C A standard which is based on current price levels
D A standard set at an ideal level, which makes no allowance for normal losses, waste and machine downtime
Question 3
Which of the following statements about budgets and standards are true?
A Standards can only be achieved under ideal conditions
B Budgets can be used in situation where output cannot be measured, but standards cannot be used in such situation
C Budget can include allowances for inefficiencies in operations, but standards use performance targets which are attainable under the most favourable conditions
D Budgets are used for planning purposes, standards are used only for control purposes
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