TRUE OR FALSE 1. The payback period reflects the amount of time for the investme
ID: 2590136 • Letter: T
Question
TRUE OR FALSE
1. The payback period reflects the amount of time for the investment to generate enough net cash flow to return the cash initially invested to purchase it.
2. Net cash flow can be calculated by adjusting the projected net income from a project for any non-cash revenues and expenses.
3. If the internal rate of return (IRR) of an investment is lower than the hurdle rate, the project should be rejected.
4. A fixed budget performance report never provides useful information for evaluating variances.
5. One possible explanation for direct labor rate and efficiency variances is the use of workers with different skill levels.
6. Managers must ensure that activities of employees and departments, contribute to meeting the company’s overall goals.
7. The task of preparing a budget should be the sole task of the most important department in an organization.
8. The capital expenditures budget summarizes the effects of investing activities on cash.
9. A manufacturing budget shows dollar amounts estimated to be spent to purchase additional plant assets and amounts expected to be received from plant asset disposals.
10. Budgets are normally more effective when all levels of management are involved in the budgeting process.
Explanation / Answer
1.The payback period reflects the amount of time for the investment to generate enough net cash flow to return the cash initially invested to purchase it.
Payback period means Initially invested cash inflow for the amount that has been received in how many periods.
True
2.Net cash flow can be calculated by adjusting the projected net income from a project for any non-cash revenues and expenses.
Projected Net Income includes Non cash expenditure & Income which has to be reduced Net income
True
3. If the internal rate of return (IRR) of an investment is lower than the hurdle rate, the project should be rejected.
Hurdle rate is the minimu required rate for the company or for the project
True
4. A fixed budget performance report never provides useful information for evaluating variances.
Fixed budget performances never evaluat the variances it is useful only for the fixed expenses
False
5. One possible explanation for direct labor rate and efficiency variances is the use of workers with different skill levels.
Direct Labor rate is the rate is the rate variances and efficiency variances is the skill variances that has been paid based on the performances
True
6. Managers must ensure that activities of employees and departments, contribute to meeting the company’s overall goals.
True
7. The task of preparing a budget should be the sole task of the most important department in an organization.
False
8. A capital expenditures budget summarizes the decisions made for the acquisition of fixed assets for several future years
False
9. A manufacturing budget shows dollar amounts estimated to be spent to purchase additional plant assets and amounts expected to be received from plant asset disposals.
False
10. Budgets are normally more effective when all levels of management are involved in the budgeting process.
True
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.