Which of the following best defines incremental earnings?

a) the net present value (npv) of earnings that a firm is expected to receive as the result of an investment decision
b) the earnings arising from all projects that a company plans to undertake in a fixed time span
c) cash flows arising from a particular investment decision
d) the amount by which a firm's earnings are expected to change as a result of an investment decision

Option D

Explanation: Incremental earnings are the reference point to any income-producing initiative to be evaluated as they measure the effect on earnings of a contract.

Incremental earnings refer to the sums a company wants to improve its profits as a result for an investment strategy— for instance, purchasing a line of business or product, or beginning a project.

In simple words, Incremental earnings can be best described as the extent for which the profits of a business increases as a consequence of such transactions, such as new items to be sold. Thus, from the above we can conclude that the correct option is D.

income statement is prepared in order to show the profits and loss of a business. in order to prepare the income statement she should collect all the income and expenses of the product with the cost of production.