Sunk Costs

question 52

Multiple Choice

Sunk costs:

• A) are irrelevant.
• B) should be considered when determining an investment's relevant cash flows.
• C) are equal to the firm's opportunity costs.
• D) all of the above.

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Definitions:

Note Payable

A financial obligation or loan evidenced by a promissory note, specifying terms such as the repayment schedule, interest, and maturity date.

Accounts Payable

Liabilities or amounts owed by a company to its creditors for goods and services received that have not yet been paid for.

Journal Entry

A record in bookkeeping that documents every financial transaction, detailing the accounts affected and whether they are debited or credited.

Interest-Bearing Note

A debt instrument that pays interest to the holder, typically at a fixed rate, until the note reaches its maturity date.