The Bottom-Up Approach to Computing the Operating Cash Flow of a Project

question 33

Multiple Choice

The bottom-up approach to computing the operating cash flow of a project applies only when

• A)both the depreciation expense and the interest expense are equal to zero.
• B)the project is a cost-cutting project.
• C)the interest expense is equal to zero.
• D)no fixed assets are required for the project.
• E)taxes are ignored and the interest expense is equal to zero.

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Definitions:

Balance Sheet

A financial statement that summarizes an entity's assets, liabilities, and shareholders' equity at a specific point in time.

Financial Statements

Formal records of the financial activities and position of a business, individual, or other entity, typically including the balance sheet, income statement, and cash flow statement.

Trial Balance

A financial statement that lists all the accounts of a company and their balances at a particular time, used to ensure that debits equal credits.

Adjusted

Pertaining to alterations made to financial statements or balances to correct them or to reflect changes not captured in the original entries.