Danielle's Is a Furniture Store That Is Considering Adding Appliances

question 37

Multiple Choice

Danielle's is a furniture store that is considering adding appliances to its offerings.Which of the following should be considered incremental cash flows of this project?
I.utilizing the credit offered by a supplier to purchase the appliance inventory
II.benefiting from increased furniture sales to appliance customers
III.borrowing money from a bank to fund the appliance project
IV.purchasing parts for inventory to handle any appliance repairs that might be necessary

• A)I and II only
• B)III and IV only
• C)I, II, and IV only
• D)II, III, and IV only
• E)I, II, III, and IV

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Definitions:

Fixed Assets

Fixed Assets are long-term tangible assets, such as buildings, machinery, and equipment, used in the operations of a business and not expected to be converted to cash within a year.

Current Assets

Assets that are expected to be converted into cash, sold or consumed within one year or within the operating cycle of a business, whichever is longer.

Intangible Assets

Non-physical assets that have value, such as patents, trademarks, and copyrights, known for their long-term benefits to a company.

Gain on Sale

The profit recognized when an asset is sold for more than its carrying amount.