The cash flow statement differs from the balance sheet and income statement in that it excludes non-cash transactions required by accrual basis accounting, such as depreciation, deferred income taxes, write-offs on bad debts and sales on credit where receivables have not yet been collected.
Which of the following cash flows is not considered when using the net present value?
The correct option is (c) past cash outflows. Past cash outflows wouldn’t be considered by the company when they using the net present value method for determining the profitable project. It considers present cash flows to calculate the current value of future cash flows.
Which of the following is not considered when calculating capital budgeting cash flows?
Interest expenses are considered when calculating cash flows. Taxes are not considered in identifying the size of relevant cash flows. Only the initial cash flow is considered in capital budgeting. Sunk costs are considered in capital budgeting, while opportunity costs are not.
Which one of the following would not be counted as part of incremental cash flow?
Which of the following would not be counted as part of incremental cash flow? – Sunk cost is historical and will not change irrespective of whether the project goes ahead or not. Therefore it should not count as part of the project’s incremental cost.
What is the order of involvement of the following parties in the capital budgeting authorization process?
What is the order of involvement of the following parties in the capital budgeting authorization process? Plant managers, capital budget committee, officers, board of directors. You just studied 10 terms!
Which one of the following is not a capital budgeting decision?
It includes expansion programs, merger decisions, replacement decisions but will not comprise of the inventory related decision making.
Which is not a cash flow consideration in evaluating a proposed capital project?
Which of the following is not a cash flow consideration in evaluating a proposed capital project? a. b. d. a. interest expenses incurred to finance the project are included. b. interest expense is considered in the cash flow estimates only if the financing is principally from debt.
Why is depreciation not included in cash flows?
Cash flows should ignore depreciation because it is a non-cash charge. Only direct effects of a project should be included in cash flow calculations. d. Cash flows should be measured on an incremental basis.
How are cash flows measured on an incremental basis?
Cash flows should be measured on an incremental basis. a. always considered in the net cash flow calculation. b. normally not considered in the net cash flow calculation. always considered as a part of the net investment. d.
