An Increase in Which One of the Following Will Increase

question 28

Multiple Choice

An increase in which one of the following will increase the operating cash flow?

• A) employee salaries
• B) office rent
• C) building maintenance
• D) equipment depreciation
• E) equipment rental

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Definitions:

Variable Costs

Expenses that change in proportion to the activity of a business, such as costs for raw materials or production costs.

Fixed Costs

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance.

Incremental Cash Flow

The additional cash flow from taking on a new project, calculated as the difference between the project's cash flows if the project is taken versus if it is not.

Incremental Cash Flow

The additional cash flow a company receives from undertaking a new project, considering the revenue and costs involved.