Which of the Following Statements Regarding Cash Flow Is Correct

question 73

Multiple Choice

Which of the following statements regarding cash flow is correct?

• A) Cash flow measures changes in the firm's cash account.
• B) Cash flow should be recognized only when it has accrued according to GAAP practices.
• C) In evaluating capital budgeting decisions, cash flows should be valued on a pre-tax basis for consistency's sake.
• D) After-tax cash flow is usually identical to accounting profits when accrual accounting is used for financial statement purposes.
• E) Incremental cash flows should include opportunity costs but ignore sunk costs.

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