Which of the Following Cash Flows Should Be Treated as Incremental

question 49

Multiple Choice

Which of the following cash flows should be treated as incremental flows when deciding whether to go ahead with a new pharmaceutical drug?

• A) The cost of research and development undertaken for developing the new drug in the past five years
• B) The annual accounting depreciation charge
• C) The increase in taxes resulting from the depreciation charges
• D) None of the above

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Definitions:

Balance Sheet

A record presenting a business's holdings, obligations, and investor equity at a distinct time.

Unclassified Balance Sheet

A simple format of a balance sheet where assets, liabilities, and equity are listed in a single column without categorizing them into subcategories.

Accounts

Accounts refer to the records of financial transactions, reflecting credits and debits in the financial statements of a business or an individual.

General Ledger

A complete record of all the financial transactions of a company, organized by accounts, which provides the data used to create financial statements.