Which of the following statements regarding cash ﬂow is correct?

Question

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Incremental cash flows should include opportunity costs (the value of the best alternative forgone) but ignore sunk costs (costs that have already been incurred and cannot be recovered). The other statements are incorrect. A) Cash flow measures changes in the firm's cash flows, but those changes may not always be reflected in the cash account. B) Cash flows should be recognized when they occur, not when they accrue. C) In evaluating capital budgeting decisions, cash flows should be valued on an after-tax basis to account for taxes. D) After-tax cash flows may be different from accounting profits due to tax effects and non-cash expenses.

Which of the Following Statements Regarding Cash ﬂOw Is Correct