COST ACCOUNTING
CAPITAL BUDGETING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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How to evaluate the risk of a project?
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Need to make sure cash inflows exceed cash outflows.
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Need to make sure cash outflows exceed cash inflows.
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Need to make sure cash inflows equal to cash outflows.
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Need to make sure cash inflows and cash outflows is acceptable.
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Explanation:
Detailed explanation-1: -You can calculate your project cash flow using a simple formula: the cash a project generates minus the expenses a project incurs. Exclude any fixed operating costs or other revenue or costs that are not specifically related to a project.
Detailed explanation-2: -By showing how a company has managed the inflow and outflow of cash, the statement of cash flows may paint a more complete picture of a company’s liquidity (the ability to pay bills and creditors and fund future growth) than the income statement or the balance sheet.
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