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Test your basic knowledge |
Capital Budgeting
Start Test
Study First
Subject
:
business-skills
Instructions:
Answer 25 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. The projection of both volume and dollar value of sales for a future period.
Imputed Cost
Opportunity Cost
Constraint
Sales Forecast
2. A net cash inflow that will be lost if a particular course of action under consideration is taken as compared to another possibility.
Sunk Cost
Split-Off Point
Capital Intensity Ratio
Opportunity Cost
3. Limits within which the volume of activity can vary and cost relationships still remain valid.
Mission Statement
Relevant Range
Sunk Cost
Historic Cost
4. A cost that is expected to differ among alternative future courses of action - also known as differential and relevant cost
Incremental Cost
Imputed Cost
Split-Off Point
Financial Planning Process
5. A cost that differs between alternatives - also known as incremental cost or relevant cost.
Relevant Range
Capital Structure
Differential Cost
Incremental Cost
6. A relevant cost in decision making but one for which information might not be available.
Capital Structure
Imputed Cost
Differential Cost
Opportunity Cost
7. A limited resource that limits an organization's ability to produce enough to satisfy demand
NOPAT (net operating profit after taxes)
Corporate Strategies
Operating Plans
Constraint
8. The plans used to implement the corporate strategy involving the identification of the responsibility for implementation - specific tasks to be accomplished - and revenue and costs targets - among other things.
Operating Plans
Opportunity Cost
Imputed Cost
Capital Intensity Ratio
9. Broad - long-range plans such as developing new technologies in a particular field.
Imputed Cost
Corporate Strategies
Mission Statement
Operating Plans
10. The dollar value of assets that is required to create a dollar of sales
Sales Forecast
Outsourcing
Capital Intensity Ratio
Free Cash Flow
11. The acquisition cost o assets - also known as acquisition or original cost.
Corporate Strategies
Relevant Range
Historic Cost
Relevant cost for decision making
12. The book value of old equipment is not relevant because you cannot change what has already been spent - current disposal price of old equipment is relevant since future cash flows will differ among alternatives - the gain or loss on sale of equipme
Differential Cost
Imputed Cost
Relevant cost for decision making
Split-Off Point
13. Involves taking the operating plans and developing proforma financial statements - forecasting financing needs - and measurement (control) criteria.
Financial Planning Process
Sunk Cost
Split-Off Point
Constraint
14. Define the problem - determine possible alternatives - prepare estimates - identify possible constraints - select the best alternative.
Historic Cost
Common Cost
Steps to use in the decision-making process
NOPAT (net operating profit after taxes)
15. The cash flow actually available for distribution to investors after the firm has made all necessary investments in fixed assets and permanent working capital necessary to support on-going operations.
Split-Off Point
Free Cash Flow
Incremental Cost
Outsourcing
16. Projected financial statements based on a given set of assumptions.
Sunk Cost
Imputed Cost
Capital Intensity Ratio
Proforma Financial Statements
17. The point in the manufacturing process where the joint products produced become individually identifiable.
Sales Forecast
Capital Structure
Split-Off Point
Common Cost
18. The strategic use of outside resources by organizations to perform tasks to produce products traditionally handled by or produced using internal staff and resources.
Sales Forecast
Joint Product Costs
Outsourcing
Steps to use in the decision-making process
19. The profit a firm would make id there were no debt and no non-operating assets.
Common Cost
Relevant Range
NOPAT (net operating profit after taxes)
Incremental Cost
20. A statement defining the general purpose o the company.
Opportunity Cost
Constraint
Mission Statement
Relevant Range
21. A cost that is incurred to support a number of activities and cannot be directly traced to any of them
Avoidable Cost
Opportunity Cost
Common Cost
Mission Statement
22. Percentage of debt - preferred stock - and common stock used for financing the firm's assets.
Relevant Range
Split-Off Point
Steps to use in the decision-making process
Capital Structure
23. A cost that could be eliminated in whole or in part if a different course of action is taken that would either end the need for the activity or increase efficiency
Common Cost
Financial Planning Process
Opportunity Cost
Avoidable Cost
24. A cost that has already occurred and is not affected by a capital budgeting decision.
Sunk Cost
Free Cash Flow
Relevant cost for decision making
Outsourcing
25. Costs of a single process or a series of processes that simultaneously produce two or more products of significant value.
Incremental Cost
Historic Cost
Sunk Cost
Joint Product Costs