(Consider This)Which of the Following Is an Example of a Sunk

question 31

Multiple Choice

(Consider This) Which of the following is an example of a sunk cost,as it relates to a firm?

• A) An expenditure on raw materials used in the production process.
• B) An expenditure on a nonrefundable,nontransferable airline ticket.
• C) An expenditure to buy a delivery van.
• D) An expenditure for a new factory.

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Definitions:

Investing Activities

Transactions involving the purchase or sale of long-term assets and investments, reflecting how cash is spent on investments to grow or maintain the business.

Financing Activities

Transactions and events where a business obtains funds or pays back funds to owners and creditors, typically reflected in the cash flow statement.

Direct Approach

A method used in financial accounting that records all transactions directly affecting the income statement, emphasizing cash receipts and payments.

Indirect Approach

A strategy or method that tackles objectives through indirect means rather than directly aiming at them.