In an Equipment Replacement Decision, the Cost of the Old

question 51

Multiple Choice

In an equipment replacement decision, the cost of the old equipment is a(n)

• A) incremental cost.
• B) sunk cost.
• C) relevant cost.
• D) opportunity cost.

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Definitions:

Financing

The act of providing funds for business activities, making purchases, or investing, either through debt, equity, or other financial instruments.

Dual Effects Concept

The principle that every transaction has at least two effects on the financial statements - one that increases a category and another that decreases another category, maintaining the balance.

Transaction

An event or activity that impacts the financial position of a company, typically involving the exchange of goods, services, or money.