Which of the following cash flows should not be treated as relevant incremental flows when deciding whether to go ahead with production of a new model of mobile phone? I. The resulting reduction in the sales of the company’s existing models II. Falls in sales of phones made by competitors III. Additional sales of related items such as phone covers and electric leads IV. The cost of market research undertaken during the past five years V. Changes in working capital arising from proceeding with the new phone a I and II only b II and IV only c II and III only d I and V e All five should be treated as relevant cash flows
Which of the following cash flows should not be treated as relevant incremental flows when deciding whether to go ahead with production of a new model of mobile phone? I. The resulting reduction in the sales of the company’s existing models II. Falls in sales of phones made by competitors III. Additional sales of related items such as phone covers and electric leads IV. The cost of market research undertaken during the past five years V. Changes in working capital arising from proceeding with the new phone a I and II only b II and IV only c II and III only d I and V e All five should be treated as relevant cash flows
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Which of the following
I. The resulting reduction in the sales of the company’s existing models
II. Falls in sales of phones made by competitors
III. Additional sales of related items such as phone covers and electric leads
IV. The cost of
V. Changes in
a I and II only
b II and IV only
c II and III only
d I and V
e All five should be treated as relevant cash flows
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