Which Item Is Not an Example of a Sunk Cost

question 35

Multiple Choice

Which item is not an example of a sunk cost?

• A)materials needed for production
• B)purchase cost of machinery
• C)depreciation
• D)All are sunk costs.

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Definitions:

Purchases Discount

A contra-cost account in the general ledger that records discounts offered by vendors of merchandise for prompt payment of purchases by buyers.

Merchandise

Goods brought into a store for resale to customers.

Purchase Discounts

Reductions in price given by a supplier to a buyer for early payment within a specified period.

Purchase Discounts Lost

The additional expense a company incurs when it fails to take advantage of discounts offered by suppliers for early payment.