A Cost That Cannot Be Avoided or Changed Because It

question 58

Multiple Choice

A cost that cannot be avoided or changed because it arises from a past decision, and is irrelevant to future decisions, is called a(n) :

• A) Uncontrollable cost.
• B) Incremental cost.
• C) Opportunity cost.
• D) Out-of-pocket cost.
• E) Sunk cost.

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Definitions:

Financial Statements

Formal records of the financial activities and position of a business, person, or other entity, typically comprising the balance sheet, income statement, and cash flow statement.

Financial Decisions

Choices regarding the management of finances of an entity, including investment, budgeting, borrowing, and saving activities.

Cash Flow

The complete sum of cash moving in and out of a company, influencing its ability to cover short-term obligations.

Cash Budget

A financial plan that estimates cash inflows and outflows over a specific period, often used to assess liquidity and manage cash flow.