Select the Correct Statement Regarding Opportunity Costs

question 86

Multiple Choice

Select the correct statement regarding opportunity costs.

• A) Opportunity costs need not be considered in decision making.
• B) Opportunity costs are not recorded in a firm's financial accounting records.
• C) Opportunity costs represent sunk costs.
• D) All of the above.

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Definitions:

Ordinary Simple Interest

Interest calculated on the principal amount of a loan or investment, based on a simple calculation and not compounded.

360-Day Year

A simplified accounting method that assumes there are 360 days in a year, used for calculating interest and other financial metrics.

Principal

The original sum of money borrowed in a loan, or the initial amount of investment, excluding interest or profit.

Ordinary Simple Interest

Interest calculated on the principal amount only, without compounding, over a specific period.