Capital Budgeting Techniques | | GLOSSARY Capital Budget: (1) The amount of money set aside for the purchase of fixed assets (e.g., equipment, buildings, etc.). Also, (2) a request for authorization to purchase new fixed assets. Mutually Exclusive Proposals: Consideration of two or more assets that perform the same function. If one is chosen for purchase, the others are automatically rejected. Profitability Index: A ratio of the present value of the benefits (PVB) to the present value
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CHAPTER 10 The Fundamentals of Capital Budgeting Learning Objectives 1. Discuss why capital budgeting decisions are the most important decisions made by a firm’s management. 2. Explain the benefits of using the net present value (NPV) method to analyze capital expenditure decisions, and be able to calculate the NPV for a capital project. 3. Describe the strengths and weaknesses of the payback period as a capital expenditure decision-making tool, and be able to compute the payback
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ISSUE : MYOB Software not integrated DOCUMENTS ARE NOT PROPERLY PRE-NUMBERED, RECORDED & DOCUMENTED FINDINGS: Sales invoice & PO are manually produces & not pre-numbered - Asset purchased not recorded. - Unrecorded cash withdrawals. * Negative impact on FS & Cash Flow TIMESHEET ARE MANUALLY PREPARED BY EMPLOYEES ISSUE: -Employees record their time in & out themselves -No staff in charge and monitor employee attendance. SITI HAJAR BTE ZAMZANI 2010750647 KU NURNAJUAWA BTE KU
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of Form Bottom of Form Home >Managerial Accounting >Capital Budgeting > Payback Period | | | Payback Period Payback period is the time in which the initial cash outflow of an investment is expected to be recovered from the cash inflows generated by the investment. It is one of the simplest investment appraisal techniques. Formula The formula to calculate payback period of a project depends on whether the cash flow per period from the project is even or uneven. In case they are
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AN APPRAISAL OF CAPITAL BUDGETING TECHNIQUES (A CASE STUDY OF FORTHRIGHT SECURITIES AND INVESTMENT LIMITED, MARINA, LAGOS) BY OLOJOTUYI OLUFEMI O. FPA/AC/09/3-0101 BEING A PROJECT REPORT SUBMITTED TO THE DEPARTMENT OF ACCOUNTANCY SCHOOL OF BUSINESS STUDIES, THE FEDERAL POLYTECHNIC, ADO EKITI EKITI STATE IN PARTIAL FULFILLMENT OF REQUIREMENTS FOR THE AWARD OF HIGHER NATIONAL DIPLOMA IN ACCOUNTANCY DECEMBER, 2011. CERTIFICATION This
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CHAPTER ONE Introduction Understanding and being able to use capital budgeting techniques and investment appraisal tools is usually a standard requirement for most business degrees. In addition learning such methods will also give one an advantage in a real business situation, in which there is the consideration of significant capital expenditure project. Capital budgeting assists management decisions making on the process of ensuring growth of the organization. The techniques are divided into
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European Journal of Accounting Auditing and Finance Research Vol.2. No.3, pp. 69-83, May 2014 Published by European Centre for Research Training and Development UK (www.ea-journals.org) A CRITIQUE ON CASH BASIS OF ACCOUNTING AND BUDGET IMPLEMENTATION IN NIGERIA Emmanuel Amaps Loveday Ibanichuka (Fca, Ph.D) Department of Accounting,Faculty of Management Science,University of Port-Harcourt, Port-Harcourt Oyadonghan Kereotu James (Aca) (Corresponding Author) Lecturer, Department of Accounting
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Manager A. It’s All about Cash Flows • The financial manager is responsible for making decisions that are in the best interest of the firm’s owners. • A firm generates cash flows by selling the goods and services produced by its productive assets and human capital. After meeting its obligations, the firm can pay the remaining cash, called residual cash flows, to the owners as a cash dividend, or it can keep the money and reinvest the cash in the business. •
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OTHER CAPITAL BUDGETING CRITERIA Questions LG1 1. Is the set of cash flows depicted below normal or non-normal? Explain. |Time |0 |1 |2 |3 |4 |5 | |Cash Flow |-$100 |-$50 |$80 |$0 |$100 |$100 | They’re normal: there is only one change in cash flows from negative to positive. LG1 2. Derive an accept/reject rule for IRR similar to 13-8 that would make the correct decision on cash flows that
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analysis 5. Explain kaizen budgeting and how it is used for cost management 6. Prepare an activity-based budget 7. Describe responsibility centers and responsibility accounting 8. Explain how controllability relates to responsibility accounting II. CHAPTER SYNOPSIS Chapter 6 introduces the important topic of budgets. Budgets are the primary financial planning tool used by businesses. The chapter explains how businesses use budgets and budgeting as part of the management process
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