Question

In: Accounting

Indicate whether each of the following statements is true or false: A postaudit should be conducted...

Indicate whether each of the following statements is true or false:

A postaudit should be conducted at the time a capital investment is purchased.

True  False

The postaudit of a capital investment project should be made using the same analytical technique that was used in deciding to make the investment.

True  False

The purpose of postaudits is to improve a company's capital investment decision process.

True  False

The postaudit process uses expected cash flows and the company's cost of capital.

True  False

Making good estimates of future cash flows is important in making capital investment decisions.

True  False

Solutions

Expert Solution

TRUE: Pre Audit Refers to anticipate the result of Capital Investment, As Capital investment requires huge funds, time, and other resources. So Capital investment decision is very crucial decision and it may hamper the future growth of the organisation.

FALSE: The technique might be different. As while deciding capital investment project an analyst can use many techniques like PAyback period , present value of cash inflows etc.

TRUE: As the Post Audit provides a roadmap to future investment. though this an entity is able to recognize its "SWOT" and after analyzing its "SWOT" an organisation may improve its decion making process.

FALSE: Because Post audit use expected discounted cash flows and the company's cost of capital (cost of equity and cost of debt).

TRUE: Because the plan with high Cash Inflows in relatively Short period of time will be preferred more than the plan having low cash flows.


Related Solutions

Indicate whether each of the following statements is true or false. If false, indicate how to...
Indicate whether each of the following statements is true or false. If false, indicate how to correct the statement. a. The amount reported for accumulated other comprehensive income (AOCI) on the balance sheet must be a positive amount consistent with all other stockholders’ equity accounts. b. Changes in AOCI are reflected in other comprehensive income, which is different from net income. c. Other comprehensive income does not imply a change in cash.
Indicate whether each of the following statements is true or false. If it is false, you...
Indicate whether each of the following statements is true or false. If it is false, you must explain why it is false (you can use equations as part of an explanation when needed). Not explaining is the same thing as not answering. If it is true, no explanation is needed: a.   The Romer model is useful because it allows us to explain why poorer countries grow faster than richer countries. b.   The main difference between the Solow model and the...
Indicate whether each of the following statements is true or false. a. The Χ2 test is...
Indicate whether each of the following statements is true or false. a. The Χ2 test is used to compare the goodness of fit between a set of measurements and a theoretical distribution. _______ b. The variance of a random variable is always greater than or equal to zero. _______ c. The maximum likelihood estimate for some parameter represents the value that should happen most frequently. For example, the maximum likelihood estimate for the outcome of rolling a pair of 6-sided...
Indicate whether each of the following statements is true or false. 1. The corporation is an...
Indicate whether each of the following statements is true or false. 1. The corporation is an entity separate and distinct from its owners. 2. The liability of stockholders is normally limited to their investment in the corporation. 3. The relative lack of government regulation is an advantage of the corporate form of business. 4. There is no journal entry to record the authorization of capital stock. 5. No-par value stock is quite rare today.
Indicate whether the following statements are (True) or (False) and correct the False statements:
 Indicate whether the following statements are (True) or (False) and correct the False statements: 1. The corporate treasurer typically handles both cost accounting and financial accounting. 2. Marginal analysis states that financial decisions should be made and actions taken only when added benefits are greater than zero. ( 3. The conflict between the goal of a firm's owners and the goal of its non-owner managers is incompatibility. () 4. The sale of either bonds or stocks to the general public is called private placement....
Read each of the following statements, and indicate whether each statement is true or false. A:...
Read each of the following statements, and indicate whether each statement is true or false. A: Firms will raise all the common equity they can from retained earnings before issuing new common stock, because capital from retained earnings is less expensive than capital raised from issuing new common stock. B: The flotation costs associated with the sale of debt securities are greater than those associated with new common stock issues C: Firms raise capital from retained earnings only when they...
Indicate whether each of the following statements is true or false, and explain why. A competitive...
Indicate whether each of the following statements is true or false, and explain why. A competitive firm that is incurring a loss should immediately cease operations. A pure monopoly does not have to worry about suffering losses because it has the power to set its prices at any level it desires. In the long run, firms operating in perfect competition and monopolistic competition will tend to earn normal profits. Assuming a linear demand curve, a firm that wants to maximize...
Indicate whether each of the following statements is true or false. Product costs are independent of...
Indicate whether each of the following statements is true or false. Product costs are independent of the particular overhead vehicle selected. Cost drivers in activity-based costing are similar to overhead vehicles. Manufacturing companies need cost accounting systems because they convert materials into other states. When we speak of products absorbing overhead, we mean that the manufacturing process has eliminated a portion of the overhead costs. By-products are a special category of joint products. Prime costs are defined as the sum...
Indicate whether each of the following statements is true or false and why (reasons in support...
Indicate whether each of the following statements is true or false and why (reasons in support of your answer): a)Economies of scale arise because of the inverse relationship between the quantity produced and per unit fixed costs. b)In theory, monopolists and oligopolists operating in contestable markets may benefit consumers more than firms operating under conditions of perfect competition. c)Suppose that a profit maximizing monopolist has a constant marginal cost equal to 6 and faces the following inverse demand: P=30-3Q. The...
Indicate whether each of the following statements is true or false: 1. The principle of conservatism...
Indicate whether each of the following statements is true or false: 1. The principle of conservatism requires that accountants understate the company’s asset valuations and reported profits. 2. The materiality principle suggests that transactions involving minor dollar amounts need not be processed. 3. The general ledger is that set of accounting records from which figures for the balance sheet and income statement are drawn. 4. Copies of checks sent to vendors to settle accounts payable represent important source documents. 5....
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT