AICPA Exam CPA-Business Topic 1 Question 81 Discussion

Actual exam question for AICPA's CPA-Business exam

Question #: 81
Topic #: 1

[All CPA-Business Questions]

When evaluating capital budgeting analysis techniques, the payback period emphasizes:

ALiquidity.

BProfitability.

CNet income.

DThe accounting period.

Show Suggested Answer

Suggested Answer: C

Choice 'c' is correct.

Choices 'a', 'b', and 'd' are incorrect, per the above calculation.

by Bobbye at Feb 07, 2024, 01:58 PM

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Elina

2 days ago

I agree, the payback period is focused on the timing of cash flows, not overall profitability. It's a simple metric, but it doesn't tell the whole story.

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Tenesha

5 days ago

But doesn't payback period focus on how quickly an investment will recoup its initial cost?

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Isabella

8 days ago

The payback period is all about liquidity, not profitability. It's a measure of how quickly the initial investment can be recouped, so A seems like the correct answer.

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Curtis

12 days ago

I disagree, I believe it emphasizes profitability.

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Tenesha

14 days ago

I think the payback period emphasizes liquidity.

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