1. Which of the following is NOT an explanation for why an increased investment in a project affect net working capital instead of accounting profits.
A. Credit sales increase accounts receivable, which is an asset
B. increases in inventory are assets.
C. Additional financing affects the profit margin.
D. If a project increase net working capital, the money is a cash flow, not profit
2. A small boutique chooses to stock sizeable artwork and sculpture, which consumes a lot of floor and wall space in an already cramped store. The owners turned down candle makers and a specialty stationery company- both of of which are compact - in order to stock the artwork and sculpture. The consequences in cash flow following from the rejection of the candles and stationery is called _____
A. overhead cost
B.opportunity cost
C. sunk cost
D. direct cost