Answer the following statements true (T) or false (F)

1) The acquisition or construction of a capital asset is known as a capital investment.
2) A post-audit in capital budgeting is a comparison of the actual results of capital investments with the projected results.
3) Capital rationing is a process adopted when a company has limited resources, and it must find ways to reduce operating expenses in all of its divisions and units.
4) Two methods of analyzing potential capital investments—payback and accounting rate of return—ignore the time value of money.
5) The accounting rate of return shows the effect of the investment on the company's accrual-based income.


1) TRUE
2) TRUE
3) FALSE
4) TRUE
5) TRUE

Business

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