Which of the following statements regarding capital budgeting decision errors is/are true?

A) The consistent use of post-audits precludes an organisation from rejecting a desirable capital budgeting project.
B) The post-audit helps to detect errors that occur when an undesirable capital budgeting project is accepted.
C) The use of post-audits will not detect errors that occur when a desirable capital budgeting project is rejected.
D) The post-audit helps to detect errors that occur when an undesirable capital budgeting project is accepted AND the use of post-audits will not detect errors that occur when a desirable capital budgeting project is rejected.

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BFDIA Rocks · Accepted Answer

Final Answer : D, Explanation :  Post-audits can help detect errors that occur when an undesirable project is accepted, but they cannot guarantee that every bad project will be rejected. Similarly, post-audits cannot detect errors that occur when a desirable project is rejected, but they can help ensure that accepted projects are properly evaluated and executed. Therefore, the use of post-audits is important for mitigating capital budgeting decision errors.

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