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

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Multiple Choice

Which of the following is true regarding capital rationing decisions?

Capital rationing involves selecting projects when available funds are limited.

Capital rationing is only relevant for non-profit organizations.

Capital rationing occurs when a company accepts all projects with a positive net present value.

Capital rationing decisions ignore the time value of money.

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Verified step by step guidance

Understand the concept of capital rationing: Capital rationing occurs when a company has limited funds and must prioritize which projects to undertake. This typically involves selecting projects that provide the highest return or align with strategic goals.

Eliminate incorrect options: Review each statement to determine its validity. For example, capital rationing is not exclusive to non-profit organizations, so the statement 'Capital rationing is only relevant for non-profit organizations' is incorrect.

Evaluate the time value of money: Capital rationing decisions often involve financial metrics like Net Present Value (NPV), which explicitly consider the time value of money. Therefore, the statement 'Capital rationing decisions ignore the time value of money' is incorrect.

Assess the acceptance of projects: Capital rationing does not mean accepting all projects with a positive NPV. Instead, it involves selecting the most beneficial projects within the constraints of available funds. Thus, the statement 'Capital rationing occurs when a company accepts all projects with a positive net present value' is incorrect.

Identify the correct statement: The correct statement is 'Capital rationing involves selecting projects when available funds are limited,' as this accurately describes the essence of capital rationing.