In evaluating a proposed project, incremental operating cash inflows are relevant cash flows.

Question

Quizplus · Accepted Answer

Incremental operating cash inflows refer to the additional cash flows generated by a proposed project in comparison to the existing operations of the company. These cash inflows are relevant because they represent the financial benefit that the project will bring to the company. Other cash flows, such as sunk costs or financing costs, may not be relevant as they do not impact the decision to undertake the project.

In Evaluating a Proposed Project, Incremental Operating Cash Inflows Are