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Chapter 19

Accounting for Non-accounting Students · 14 exercises

Problem 1

What is the distinction between capital and revenue expenditure?

3 step solution

Problem 2

List five characteristics associated with capital expenditure.

6 step solution

Problem 3

What is meant by 'net cash flow'?

4 step solution

Problem 4

What is the payback method of capital investment appraisal?

5 step solution

Problem 6

List four disadvantages of the payback method.

5 step solution

Problem 7

What is the discounted payback method of capital investment appraisal?

5 step solution

Problem 8

What is meant by 'discounting'?

5 step solution

Problem 10

List four advantages and four disadvantages of the discounted payback method.

3 step solution

Problem 11

What is the accounting rate of return method of capital investment appraisal?

6 step solution

Problem 14

List three advantages and three disadvantages of the accounting rate of return method.

7 step solution

Problem 15

What is the NPV method of capital investment appraisal?

5 step solution

Problem 18

What is the internal rate of return method of capital investment appraisal?

4 step solution

Problem 22

How may (a) inflation and (b) taxation be allowed for in capital investment appraisal?

5 step solution

Problem 23

List three main external sources of (a) short-term finance, (b) medium-term finance and (c) long-term finance.

3 step solution

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