Chapter 26 Accounting 26e Carl Warren James M Reeve Jonathan Duchac

Chapter 26 Accounting 26e Carl Warren James M Reeve Jonathan Duchac

Complete Chapter Questions With Answers

Sample Questions Are Posted Below

1. The process by which management plans, evaluates, and controls long-term investment decisions involving fixed assets is called capital investment analysis.
   1. True
   2. False

ANSWER:                                  True

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.26-01 – 26-01

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.26 – Management Functions

ACCT.ACBSP.APC.38 – NPV/IRR Methods

ACCT.IMA.15 – Investment Decisions BUSPROG: Analytic

2. Care must be taken involving capital investment decisions, since normally a long-term commitment of funds is involved and operations could be affected for many years.
   1. True
   2. False

ANSWER:                                  True

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.26-01 – 26-01

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.26 – Management Functions

ACCT.ACBSP.APC.38 – NPV/IRR Methods

ACCT.IMA.15 – Investment Decisions BUSPROG: Analytic

3. Only managers are encouraged to submit capital investment proposals because they know the processes and are able to match investments with long-term goals.
   1. True
   2. False

ANSWER:                                  False

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.26-01 – 26-01

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.26 – Management Functions

ACCT.ACBSP.APC.38 – NPV/IRR Methods

ACCT.IMA.15 – Investment Decisions BUSPROG: Analytic

4. Methods that ignore present value in capital investment analysis include the cash payback method.
   1. True
   2. False

ANSWER:                                  True

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.26-01 – 26-01

ACCT.WARD.16.26-02 – 26-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.37 – Payback/ARR Methods

ACCT.ACBSP.APC.38 – NPV/IRR Methods

ACCT.IMA.15 – Investment Decisions BUSPROG: Analytic