When a Business Is Considering Whether to Replace Old Equipment

question 99

True/False

When a business is considering whether to replace old equipment with newer equipment, the cost of operating the old equipment-compared to the cost of operating the new equipment-is information relevant to the business decision.

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Definitions:

Net Cash Flow

The amount of cash that is generated or lost over a specific period of time, after accounting for all cash inflows and outflows.

Operating Activities

Day-to-day activities of a company involved in producing and selling its products or services, which are the main source of revenue for the business.

Accounts Payable

Liabilities owed by a business to its creditors for goods and services purchased on credit.

Cash Flow

The total amount of money being transferred into and out of a business, especially as affecting liquidity.