Capital budgeting techniques such as payback method and net present value are based upon Generally Accepted Accounting Principles (GAAP)and accrual accounting.

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Capital budgeting techniques are not based on GAAP and accrual accounting. They are based on cash flows and time value of money concepts. GAAP and accrual accounting are used for financial reporting and recording transactions in a company's books.

Capital Budgeting Techniques Such as Payback Method and Net Present