CHAPTER 11 TRUE OR FALSE

Question 1

An operational asset used for a long period of time is known as a capital asset.

Answer 1

Answer: TRUE

Question 2

Furniture would be an example of a long-term operational asset.

Answer 2

Answer: TRUE

Question 3

An example of a long-term operational asset is Merchandise Inventory.

Answer 3

Answer: FALSE

Question 4

A major criticism of the payback method is that it focuses only on the time to recover the investment and ignores profitability.

Answer 4

Answer: TRUE

Question 5

All else being equal, investments with longer payback periods are preferable.

Answer 5

Answer: FALSE

Question 6

The fact that invested cash earns interest over time is called the time value of money.

Answer 6

Answer: TRUE

Question 7

Recognition that money earns interest over time is the time value of money.

Answer 7

Answer: TRUE

Question 8

The time value of money concept explains why we would rather receive cash later rather than sooner.

Answer 8

Answer: FALSE