The working capital cash outflow, cash outflow to buy machine and cash inflow from machine are the examples of ____________?
Correct answer: C. net initial investment
- A. cash flow from operations
- B. terminal disposal of investment
- C. net initial investment
- D. average return on investment
Explanation
Net initial investment combines the machine purchase cost and working-capital outflow, while reducing them by any immediate cash inflow such as proceeds from disposing of an old machine. It measures the net cash committed at the start of a project.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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