00:02
So we have a question that asks us which one of the following represents a cash outflow from a project, right? so i'm going to go through each and every one of them and explain the reasons as to why it is or it's not a cash outflow, right? so basically when you say cash outflow, there has to be some money that is going out that we are paying out of a bank account or cash account that we're giving someone.
00:32
Else, right, that money in return maybe for services or for goods, right? so with the first one, sunk costs, right? these are basically costs that you do not see, but are covered in a way.
00:50
Let's say you embark on a project, right? and in this project, we know that lighting is already being paid for right because we have we already have a plan that pay that pays for lighting so we wouldn't actually include the lighting expense in the new project because it's a sunk cost it's already being paid for so there is no cash outflow with sunk costs right then we have an increase in accounts receivables right now an increase in accounts receivables is an increase in our debtors account, right? so basically, the people who owe us now owe more, right? so we have more people who are owing us.
01:41
That means that we took out goods and we gave to people, right? so this would result in a cash outflow, right? then now we have depreciation.
01:56
Depreciation is a non -monitory thing...