A Cost That Requires a Future Outlay of Cash, and Is

question 83

Multiple Choice

A cost that requires a future outlay of cash, and is relevant for current and future decision making, is a(n) :

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

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Definitions:

FIFO

An accounting method for valuing the cost of goods sold that assumes the earliest items purchased are the first to be sold.

Weighted Average Method

An inventory costing method that assigns a cost to inventory items based on the average cost of all similar items in inventory, weighted by the quantities purchased at different prices.

LIFO

An inventory valuation method, "Last In, First Out," where the most recently produced or purchased items are recorded as sold first.

Periodic Inventory System

An inventory system that updates inventory balances and cost of goods sold at the end of an accounting period based on a physical count.