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Which of the following statements regarding cash flow is correct? Multiple Choice Cash flow measures changes...

Which of the following statements regarding cash flow is correct?

Multiple Choice

  • Cash flow measures changes in the firm's cash account.

  • After-tax cash flow is usually identical to accounting profits when accrual accounting is used for financial statement purposes.

  • In evaluating capital budgeting decisions, cash flows should be valued on a pre-tax basis for consistency's sake.

  • Incremental cash flows should include opportunity costs but ignore sunk costs.

  • Cash flow should be recognized only when it has accrued according to GAAP practices.

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