Which of the Following Describes a Sunk Cost

question 40

Multiple Choice

Which of the following describes a sunk cost?

• A)A historical cost that may be relevant to future events
• B)One that is relevant to a decision because it changes depending on different courses of action
• C)An outlay expected to be incurred in the future
• D)A historical cost that is always irrelevant

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Definitions:

Ending Inventory

The financial value of items up for sale at the end of a fiscal period.

Lower of Cost or Market

An accounting principle requiring companies to value and report their inventory at the lower of the original cost or its current market price.

Inventory Item

An individual product or article that is held in stock by a business for the purpose of resale or production.

Inventory Value

The total cost or market value of all the goods held by a company meant for sale.