The Incremental Cash Flow That the Krusty Krab Will Incur

question 90

Multiple Choice

The incremental cash flow that the Krusty Krab will incur in year 1 if they elect to upgrade to the new grill is closest to:

• A)6500
• B)7800
• C)10,800
• D)11,500

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Definitions:

Long-Term Construction

A method in accounting that recognizes the revenues and expenses of long-term construction projects as progress is made on the project.

Completed Contract

A method in accounting where all revenue and expenses of a contract are recognized only when the contract is completed.

Percentage Of Completion

An accounting method that recognizes revenues and expenses of long-term projects as a percentage of the work completed during the period.

Inventory

Goods or materials that a business holds for the ultimate goal of resale, including raw materials, work-in-progress, and finished goods.