When a manager analyzes a project using only the incremental cash flows related to the project, the manager is following the _____ principle.

Question

Quizplus · Accepted Answer

The stand-alone principle involves analyzing a project based on the incremental cash flows that the project itself generates, ignoring any other projects or operations of the firm. This approach treats the project as if it were a separate entity or "stand-alone" business, focusing solely on its direct costs and benefits.

When a Manager Analyzes a Project Using Only the Incremental