Which of the Following Best Describes Why the Predicted Incremental

question 8

Multiple Choice

Which of the following best describes why the predicted incremental earnings arising from a given decision are not sufficient in and of themselves to determine whether that decision is worthwhile?

• A)They do not tell how the decision affects the firm's reported profits from an accounting perspective.
• B)They are not easily predicted from historical financial statements of a firm and its competitors.
• C)These earnings are not actual cash flows.
• D)They do not show how the firm's earnings are expected to change as the result of a particular decision.
• E)They do not tell us how profits change from an accounting perspective.

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