Which of the following best describes why the predicted incremental earnings arising from a given decision are not sufficient in and of themselves to determine whether that decision is worthwhile?
A)They are not easily predicted from historical financial statements of a firm and its competitors.
B)They do not tell how the decision affects the firm's reported profits from an accounting perspective.
C)They do not show how the firm's earnings are expected to change as the result of a particular decision.
D)These earnings are not actual cash flows.

Question

Quizplus · Accepted Answer

Incremental earnings are only a prediction and not actual cash flows. Other factors such as timing of cash flows, risk, and other qualitative factors must also be considered when making a decision.

Which of the Following Best Describes Why the Predicted Incremental