All of the following are examples of capital investment decisions except: a. performing routine maintenance on equipment. b. purchasing vehicles. c. constructing an addition on a building. d. installing a new general ledger system. | Homework.Study.com (2024)

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• Which of the following is considered a long range planning decision? a. addition or deletion of product line. b. design and location of new plants. c. acquisitions of buildings and equipment. d. all of the above.
• Which of the following is considered a long-range planning decision? a. addition or deletion of a product line. b. design and location of new plants. c. acquisitions of buildings and equipment. d. all of the above.
• Give an example of a qualitative factor that should be considered in a capital investment analysis related to acquiring automated factory equipment.
• Capital budgeting is the process: a. of determining how much capital stock to issue b. used in sell or process further decisions c. of determining special orders d. of making capital expenditure decisions
• Capital budgeting is the process: a. of determining how much capital stock to issue. b. that is used in sell or process further decisions. c. of determining special orders d. of making capital expenditure decisions.
• Capital investment analysis involves all of the following except A. preparing formal requests for capital investments. B. selecting the best alternative. C. analyzing the sales mix. D. dividing av
• A decision whether to borrow money or sell stock is an example of: a. a financing decision b. an investing decision c. an operating decision d. a future decision
• The process of analyzing alternative investments and deciding which assets to acquire or sell is known as: a. Planning and Control b. Capital budgeting c. Variance analysis d. Master budgeting e. M
• Which of the following is not an example of a consulting service? O Computer system installation and support. O Strategic planning assistance. O Bankruptcy trusteeship. O Tax planning and advice.
• Capital investment decisions are often incremental, involving cash flows over multiple periods. Therefore, procedures must be in place to monitor the progress of projects. One such procedure is the Milestone approach. Conduct a preliminary search to expla
• Working capital management involves decisions related to which of the following? a. whether an existing machine should be replaced with a new model b. negotiating credit terms with suppliers c. signing a contract to build a new office building d. recommen
• For the following event, determine the appropriate expenditure classification: Capital lease principal payment. Choose from the following classifications of expenditures for governmental funds: | Expenditures - Operating | Expenditures - Intergovernmen
• For the following event, determine the appropriate expenditure classification: Capital lease interest payment. Choose from the following classifications of expenditures for governmental funds: | Expenditures - Operating | Expenditures - Intergovernment
• For the following event, determine the appropriate expenditure classification: Purchase of a vehicle that will be used in the library (accounted for as a Special Revenue Fund). Choose from the following classifications of expenditures for governmental
• Does The Lease vs. Buy decision represent a financing decision which is made subsequent to the investment decision being made?
• Which of the following is not a characteristic of the payback method for making capital budgeting decisions? a. It is easy to calculate and comprehend. b. It focuses primarily on liquidity, rather than profitability of an investment project. c. It can be
• Develop two lease examples, operating and capital which includes the lease terms. State the requirements for determining whether a lease is an operating or capital lease. Provide journal entries that
• Which of the following is not a consideration in classifying a lease? A. Value of an asset on the lessor's books. B. Economic life of the asset. C. Present value of the lease payments. D. Whether the lease is cancelable.
• Which of the following is not an example of a nontaxable like-kind exchange? a - Land for an office building. b - A printer for a computer. c - Inventory for a locomotive. d - The trade of an apartment building for a store building.
• Differential analysis is a common method used when making which decisions? a. long-term capital project decisions b. short-term business decisions c. sunk cost decisions d. long-term business decisions
• Determine the term being defined by the following statement: The application of analytical tools to general-purpose financial statements and related data for making business decisions. Choose from the following choices: | Market prospects | Financial st
• In an equipment investment decision, which of the following amounts would be unaffected by a change in the tax rate? a. The present value of the initial investment in the equipment. b. The present value of the increase in working capital needed. c. The pr
• Which of the following could be considered a plant asset? A. Deposits on machinery not yet received. B. Idle equipment awaiting sale. C. Land held for possible use as a future plant site. D. Buildings.
• For the following event, determine the appropriate expenditure classification: Signing a capital lease. Choose from the following classifications of expenditures for governmental funds: | Expenditures - Operating | Expenditures - Intergovernmental | E
• Identify the choice that best completes the statement or answers the question: 2. Which of the following is a unit-level activity? a. Redesigning the process. b. Setting up the production process. c. Purchase of raw materials. d. Insuring the factor
• Give an example of each of the following: a quantitative basis for making a decision and qualitative basis for making a decision.
• 1) If you are using the payback period to make your decision among investment, what is a major assumption you are making? a) That the balance sheet is reflective of the investment choice. b) That th
• Which of the following would increase your liquid assets? a. Putting more of your salary in a 401(k) b. Buying a new car c. Buying rental property d. Making regular deposits to a savings account at your bank
• The primary focus of financial accounting is to provide information useful for: a. Investing decisions: yes; Credit decisions: yes. b. Investing decisions: yes; Credit decisions: no. c. Investing decisions: no; Credit decisions: yes. d. Investing decision
• Which of the following is an example of a change in accounting principle? a) A change in depreciation methods. b) A change in the estimated useful life of a depreciable asset. c) A change in the actuarial life expectancies of employees under a pension
• Some nonfinancial factors included in capital investment decisions are more important now than they were 20-25 years ago. Give examples of the types of nonfinancial factors that managers would consid
• Which of the following is not an example of a risk of ownership of an asset? a. Idle capacity b. Gains on the eventual sale of the asset c. Uninsured damage d. Technical obsolescence
• _____ is the process of making long-run planning decisions for investments in projects. a) Capital budgeting b) Predictions c) Obtain information d) Initial investment e) Payback
• Which of the following does not properly describe the depreciation process? a. It is an allocation process. b. It is consistent with the matching principle. c. It involves the use of estimates. d. It attempts to determine an asset's market value.
• Some non-financial factors included in capital investment decisions are more important now than they were 20-25 years ago. Give some examples of the types of non-financial factors that managers would consider more important in today's capital investment d
• The final step in the capital budget process is: a) to identify potential capital investments. b) to engage in capital rationing, if necessary, to choose among alternative investments. c) to utilize decision rules when screening out undesirable investment
• Which of the following is an example of managing earnings downwards? a. Increasing estimated salvage value of equipment b. Increasing the life of depreciable assets c. Underestimating warranty claims d. None of the above
• Which of the following are common characteristics of property, plant, and equipment? (Select all that apply.) a. used in normal operations b. intangible c. used within 1 year or the operating cycle, whichever is longer d. tangible e. long-lived
• What are five different types of decisions that could use incremental analysis? What are the factors to be considered in retaining or replacing equipment?
• An example of a prospective accounting application is a change: Select one: a. From the FIFO method of inventory valuation to the Weighted Average method b. In the service life of plant assets, based on changes in the economic environment c. From the cas
• A) In your own words, define capital investments. B) Discuss the financial and non-financial aspects of capital investment decisions.
• Evaluate the following statement: "Capital budgeting emphasizes the key role management has in value creation by taking projects and expanding the size of the firm if profitable."
• Provide an example of a transaction that would have the following effects on the items in a firm's financial statements. Increase a liability; decrease retained earnings.
• Which of the following is not a fundamental decision of financial management? a. the capital budgeting decision b. the macroeconomic management decision c. the financing decision d. the working capital management decision
• We know all about Capital budgeting and the different procedures used for screening projects. But, if the IRR rule and the NPV rule lead to different decisions for a stand-alone project, which would you follow, and why?
• Provide an example of a transaction that would have the following effects on the items in a firm's financial statements. Increase an asset; decrease some other asset.
• With which of the following methods of accounting for a business combination does a minority interest category not arise? A) Pooling of interests B) The purchase method C) The new entity approach D) Proportionate consolidation
• Offer some examples of expansion or growth opportunities in which companies might use capital budgeting methods to analyze. Provide examples.
• An example of a correction of an error in previously issued financial statements is a change: a. from the FIFO method of inventory valuation to the LIFO method. b. in the service life of plant assets, based on changes in the economic environment. c. from
• Which of the following is an example of a tangible asset? A. Bonds B. Mutual funds C. Copyright D. Stocks E. None of the above
• The process of choosing, making, and financing investments that affect financial results over multiple future years is: A. capital budgeting B. operating budgeting C. financial budgeting D. cash budgeting
• 1. Summarize the pros and cons of the six capital budgeting methods. 2. In what types of situations would capital budgeting decisions be made solely on the basis of the project's Net Present Value (N
• Which of the following is not a general objective in the design of an information system? a. A system should provide information that is timely and relevant for decision making by management and operating personnel. b. The output of a system should be hig
• Which of these is not a stage in the systems development life cycle? a) Planning and investigation b) Analysis c) Design and acquisition d) Implementation, follow up, and maintenance e) All of these are stages in the systems development life cycle
• The process by which management allocates available investment funds among competing capital investment proposals is referred to as: a. capital rationing. b. capital expenditure budgeting. c. leasing. d.capital assignment
• A firm is undergoing reorganization. Reorganization items on the income statement are likely to include all the following except Select one: A. Gains on the settlement of post-petition liabilities. B. Penalties from the cancelation of purchase contracts.
• Which of the following is an intangible asset? A. Goodwill. B. Land. C. Plant and machinery. D. Building.
• For the following event, determine the appropriate expenditure classification: Receiving supplies (assume the purchases method is used). Choose from the following classifications of expenditures for governmental funds: | Expenditures - Operating | Expe
• Some financial instruments can have both debt and equity features. The most common example is convertible debt (bonds or notes convertible by the investor into common stock). A topic of debate for sev
• In business decision scenarios, managers face the dilemma, for example, whether to continue the project or to abandon it, whether to finance a project with debt or equity, etc. How can we apply
• Consider where you currently work, where you have previously worked, or a well-known company where you would like to work. How might this company make capital investment decisions? What capital investment decisions do you see evidence of at this company?
• Which of the following are examples of debt overhang? Which examples are likely to lead to a cutback in spending? a) Your uncle starts a restaurant, borrowing to fund his investment. The restaurant f
• Financial assets: a. provide some kind of service. b. include cars, houses, and factory equipment. c. have value because of claims to future cash flows. d. are not legal documents.
• Which of the following techniques is most useful for a special order decision? a. Accounting rate-of-return method b. Payback method c. Incremental analysis d. Present value method
• 15. Which of the following is not a benefit of following a well-designed budgeting process? |A.| Improved decision-making processes. |B. |Improved performance evaluations. |C. |Improved coordinatio
• Capital budgeting decisions require careful analysis because they are generally the ........................, ............................ and ...................... decisions that management faces.
• What is capital budgeting? What are the differences between screening decisions and preference decisions? Do you ever have occasion to make capital budgeting decisions in your personal life?
• The concepts of ROI and particularly of NPV might be helpful in your life as you decide to make large financial decisions. Give an example of a financial decision you may apply NPV to in the future.
• Indicate the effect of the following transactions on the working capital requirement: More finished goods are produced for order.
• What steps can be taken to incorporate intangible benefits into the capital budget evaluation process?
• Changes in stock prices: A) do not affect people"s wealth and their willingness to spend. B) affect firms' decisions to sell stock to finance investment spending. C) occur in regular patterns. D) are unimportant to decision makers.
• Total asset turnover is a component of which of the following of the building blocks of financial analysis? Select one: O Solvency O Efficiency O Comparability O Market Prospects O Profitability
• Which of the following items are included in property, plant, and equipment? (Select all that apply.) a. oil wells b. investments c. furniture d. inventory e. machines f. mineral mines
• In performing a cost-benefit analysis systems development, which of the following is not a tangible benefit? a. increased sales b. reduced inventories c. expansion into other markets d. improved control environment e. all of the above are tangible benefit
• Which of the following methods is used to account for long-term investments in equity securities when the investor has a significant influence? A. Market value method B. Investment method C. Equity method D. Consolidation method
• There are two types of capital budgeting decisions, screening decisions, and preference decisions. What is the difference between the two?
• Incremental analysis is most useful: A. in developing relevant information for management decisions B. as a replacement technique for variance analysis C. in choosing between capital budgeting methods D. in evaluating the master budget
• Which of the following is not likely to be part of the authorization of fixed assets? a) Specific authorization b) Inclusion in the capital budget c) An investment analysis or feasibility analysis of the purchase d) Approval of the depreciation schedule
• Review the following incomplete statements regarding the advantages of budgeting. a. The budgeting process forces management to focus on the _____ and not be distracted by daily crises in the organiz
• What are the three methods of depreciation? Develop a chart using an example of your choice and calculate the depreciation for 4 years. How do the three methods affect the income statement and the balance sheet?
• Reflect upon the differences between purchasing a $30,000 vehicle and leasing it. Provide one scenario in which it would be advantageous for a company to purchase the vehicle and another scenario in which it would be advantageous to lease.
• Which of the four methods of evaluating capital projects would you prefer to use, and why? How would the type of capital investment decision you were making affect your choice of method?
• Which of the following should be the main determinant in the selection of the depreciation method for long-term operational assets? A) The method that best matches the pattern of asset use. B) The method that is most convenient to compute. C) The method t
• For each of the following situations, indicate a qualitative factor that should be considered prior to making the decision: a. A software company currently has a large facility for producing component
• A facilities engineer is considering a $50,000 investment in an energy management system (EMS). A facilities engineer is considering a $50,000 investment in an energy management system (EMS). The system is expected to save $10,000 annually in utility bill
• Working capital Management Indicate how each of the following six different transactions Dynamic mattress might make would would affect (I) cash and (II)Networking capital: A) Paying out a $2 millio
• Influence is the basis for deciding how to account for equity investments. What is the basis for deciding how to account for debt investments? A. Control B. Initiative C. Pressure D. Intent
• Which of these is not a logical procedure that is followed in the systems analysis phase of a systems study? a) Define the problem(s) in the current system b) Identify the company's goals c) Perform a systems survey to acquire information about the curren
• Management uses several capital budgeting methods in evaluating projects for possible investment. Identify those methods that are more desirable from a conceptual standpoint, and briefly explain what features these methods have that make them more desirab
• In the decision-making process, which of the following situations would be best addressed by managers using a segmented income statement rather than a contribution margin format income statement? a. The decision on whether or not a one-time special order
• Managers make three types of decisions that lead to shareholder value, namely: a. Operating, financing, and investment decisions. b. Operating, management, and financing decisions. c. Management, financing, and investment decisions. d. Operating, manageme
• For the following balance sheet item, determine the appropriate classification category in a balance sheet and determine if the item is a contra account: Land held for investment.
• Basic sources (forms) of capital include which of the following? a. Debt b. Equity c. Leases d. Convertible bonds e. Both (a) and (b)
• Consider the following balance sheet item: Land (held for investment). Determine its appropriate classification category. Also, if it is a contra account, indicate by placing a "-" sign before the classification. Choose from the following classification
• Consider the following two investment projects. Both can be replicated forever. a. With an infinite planning horizon, which is a better choice at MARR = 12% Why? b. With a 10-year planning horizon,
• Classify the following item as belonging in the revenue, expenditure, human resources/payroll, production or financing cycle: Obtain a bank loan.
• What are the key components that healthcare organizations have in regards to investment planning, capital planning, and operational planning for developing and implementing the healthcare organizational budget?