The incremental cash flow principle claims that sunk costs must be taken into account in the firm's decision whether to accept or reject a project.

Question

Quizplus · Accepted Answer

The incremental cash flow principle states that sunk costs should not be included in the decision-making process because they are irrelevant to future cash flows. Only costs that are expected to occur in the future should be considered when deciding whether to accept or reject a project.

The Incremental Cash Flow Principle Claims That Sunk Costs Must