Sunk Costs Are Costs That Have Been Incurred, or Whose

question 9

True/False

Sunk costs are costs that have been incurred, or whose payment cannot be avoided; they are irrelevant to future decisions.

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Definitions:

Bonds Payable

A long-term liability account on a company’s balance sheet that represents the amount owed to bondholders by the issuer, to be repaid at a future date.

Unamortized Premium

Unamortized Premium is the portion of the bond premium that has not yet been expensed and is allocated over the remaining life of the bond as an adjustment to interest expense.

Consolidated Gain or Loss

The combined profit or loss of a parent company and its subsidiaries, reported in the consolidated financial statements.

Statement of Cash Flows

A financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, breaking the analysis down to operating, investing, and financing activities.