Which of the Following Describes a Sunk Cost

question 183

Multiple Choice

Which of the following describes a sunk cost?

• A)One that is relevant to a decision because it changes depending on the alternative course of action selected
• B)An outlay expected to be incurred in the future
• C)A historical cost that is always irrelevant
• D)A historical cost that may be relevant

---

Definitions:

Accounting Assumption

Fundamental beliefs or principles that guide the preparation of financial statements, such as going concern, accrual basis, and consistency.

Integrity

The quality of being honest and having strong moral principles; moral uprightness.

Going Concern

An accounting principle that assumes a company will continue to operate and fulfill its obligations in the foreseeable future.

Going Concern Assumption

An accounting principle assuming that a company will continue in operation for the foreseeable future.