The following are 10 technical accounting terms introduced or emphasized in this chapter: Each of the following
Question:
Each of the following statements may (or may not) describe one of these technical terms. For each statement, indicate the accounting term described, or answer None if the statement does not correctly describe any of the terms.
a. The examination of differences among revenue, costs, and cash flows under alternative courses of action.
b. A cost incurred in the past that cannot be changed as a result of future actions.
c. The process of planning and evaluating proposals for investments in plant assets.
d. The average annual net income from an investment expressed as a percentage of the average amount invested.
e. The length of time necessary to recover the entire cost of an investment from resulting annual net cash flows.
f. The present value of an investments expected future cash flows.
g. The amount of money today that is considered equivalent to the cash flows expected to take place in the future.
h. The required rate of return used by an investor to discount future cash flows to their present value.
i. Often an investments final cash flows to be considered in discounted cash flowanalysis.
What is Discounted Cash Flows? Discounted Cash Flows is a valuation technique used by investors and financial experts for the purpose of interpreting the performance of an underlying assets or investment. It uses a discount rate that is most...
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Financial and Managerial Accounting the basis for business decisions
ISBN: 978-0078111044
16th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello