Differential analysis focuses mostly on which of the following?
A)opportunity costs
B)cash outflows only.
C)both cash inflows and outflows.
D)accrual accounting.

Question

Quizplus · Accepted Answer

Differential analysis, also known as incremental analysis, involves analyzing the difference in costs and revenues between two or more alternatives. This analysis typically takes into account both cash inflows and outflows, as well as non-cash factors such as opportunity costs. Therefore, Choice C, both cash inflows and outflows, is the correct answer. Choice A, opportunity costs, is also relevant to differential analysis, but not the primary focus. Choice B, cash outflows only, is too narrow and ignores potential revenue increases. Choice D, accrual accounting, is not directly related to differential analysis.

Differential Analysis Focuses Mostly on Which of the Following