Which of the following is not a cash flow consideration in evaluating capital budgeting projects?
A)Income taxes on incremental earnings
B)Identifiable incremental overhead
C)Incremental accounting profit (net income)
D)Depreciation

Question

Quizplus · Accepted Answer

Incremental accounting profit (net income) is not a cash flow consideration because it is a non-cash item that is calculated using accrual accounting. Cash flows are the actual inflows and outflows of cash, while net income includes non-cash items such as depreciation. Income taxes on incremental earnings, identifiable incremental overhead, and depreciation are all cash flow considerations in evaluating capital budgeting projects.

Which of the Following Is Not a Cash Flow Consideration