Which of the Following Cash Flows Are NOT Considered in the Calculation

question 56

Multiple Choice

Which of the following cash flows are NOT considered in the calculation of the initial outlay for a capital investment proposal?

• A) increase in accounts receivable
• B) cost of issuing new bonds if the project is financed by a new bond issue
• C) installation costs
• D) None of the above-all are considered.

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Definitions:

Matching Principle

An accounting principle that expenses should be recorded in the period in which they are incurred to generate revenues, ensuring that financial statements accurately reflect a company's performance.

Unrealized Profits

Profits that have been earned but not yet realized through a transaction, such as an increase in value of an asset not yet sold.

Investment Account

An account that holds securities, cash, and other assets managed by a financial institution or individual.

After-Tax Dollar Value

The amount of money remaining from earnings, investments, or transactions after all applicable taxes have been deducted.