Asked by Diego Silva on Apr 24, 2024
Verified
Which of the following are (is) generally considered problems associated with cash flow estimation?
A) Uncertainty about the future cash flows
B) The introduction of bias into the estimation of cash flows
C) Uncertainty about the magnitude of fixed cost financing charges
D) a and b
Fixed Cost Financing
A financing strategy where the costs remain constant regardless of the level of production or sales.
Future Cash Flows
Expected cash receipts and payments a business anticipates receiving or paying out over a future period.
Bias
A preconception or inclination towards something, potentially leading to unfair judgments or decisions in various contexts.
- Acquire knowledge on the obstacles and unpredictability when forecasting future cash flows across diverse project categories.
Verified Answer
NP
Nisha patel7 days ago
Final Answer :
D
Explanation :
Both uncertainty about the future cash flows and introduction of bias into the estimation of cash flows are common problems associated with cash flow estimation. While uncertainty about the magnitude of fixed cost financing charges can also be a problem, it is not as commonly cited as the other two issues. Therefore, options A and B are the best choices. Choice D includes both A and B, making it the correct answer.
Learning Objectives
- Acquire knowledge on the obstacles and unpredictability when forecasting future cash flows across diverse project categories.
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