Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

1. Introduction to Accounting

Types of Accounting

Financial Accounting

1. Introduction to Accounting

Types of Accounting

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Which of the following statements about the payback method is true?

The payback method considers all cash flows over the entire life of a project.

The payback method is the most accurate method for evaluating profitability.

The payback method discounts future cash flows to present value.

The payback method ignores the time value of money.

Previous problemNext problem

Verified step by step guidance

Understand the payback method: The payback method is a capital budgeting technique used to determine the time it takes for an investment to recover its initial cost through cash inflows. It is a simple and quick way to assess the risk and liquidity of a project.

Clarify the limitations of the payback method: The payback method does not consider the time value of money, meaning it does not discount future cash flows to their present value. This is a key limitation because it ignores the fact that money received in the future is worth less than money received today.

Evaluate the statement about cash flows: The payback method only considers cash flows until the initial investment is recovered. It does not account for cash flows beyond the payback period, which means it does not evaluate the profitability of the entire project.

Assess the accuracy of the payback method: The payback method is not the most accurate method for evaluating profitability because it ignores factors like the time value of money, cash flows after the payback period, and the overall return on investment.

Identify the correct statement: Based on the characteristics of the payback method, the correct statement is that the payback method ignores the time value of money. This aligns with the method's limitations and its focus on recovering the initial investment without discounting future cash flows.