Increases in inventory and accounts receivable expected to occur if a proposed advertising campaign is undertaken are examples of sunk costs.

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Increases in inventory and accounts receivable are not examples of sunk costs. Sunk costs are costs that have already been incurred and cannot be recovered, regardless of whether or not the proposed advertising campaign is undertaken. Examples of sunk costs may include past advertising expenses or the cost of machinery purchased for a project that has since been cancelled.

Increases in Inventory and Accounts Receivable Expected to Occur If