IMANET Exam CMA Topic 2 Question 29 Discussion

Actual exam question for IMANET's CMA exam

Question #: 29
Topic #: 2

[All CMA Questions]

Which one of the following statements concerning cash flow determination for capital budgeting purposes is not correct?

ATax depreciation must be considered because it affects cash payments for taxes.

BBook depreciation is relevant because it affects net income.

CSunk costs are not incremental flows and should not be included

DNet working capital changes should be included in cash flow forecasts.

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Suggested Answer: B

Tax depreciation is relevant to cash flow analysis because it affects the amount of income taxes that must be paid. However, book depreciation is not relevant because it does not affect the amount of cash generated by an investment.

by Gearldine at May 08, 2022, 04:02 AM

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