Question

Select the incorrect statement regarding relevant costs and revenues. Group of answer choices Sunk costs are never relevant for decision-making purposes. Differential revenues are expected future revenues that differ from past revenues. To be relevant, a cost or revenue must not be future-oriented and must differ between the alternatives. Avoidable costs are also known as differential costs.

Answer 1

The incorrect statement regarding relevant costs and revenues:

To be relevant, a cost or revenue must not be future-oriented and must differ between the alternatives.

Step-by-step explanation:

For a cost or revenue to be considered as relevant, it must be incurred or earned at a future time. It must also differ between the options available for decision making. A cost or revenue cash flow is relevant if it arises from a management decision and can be avoided. This simply means that if the cost or revenue is not affected by management decision or does not make any difference in decisions, it is not relevant.