When calculating cash flows, it is important to consider them on an incremental basis.

Question

Quizplus · Accepted Answer

Cash flows should be considered on an incremental basis as it helps in understanding the impact of a particular decision or investment on the overall cash flows of the business. Incremental cash flows are the additional cash flows that result from a particular decision or investment, and they are the relevant cash flows for decision making.

When Calculating Cash Flows, It Is Important to Consider Them