A Cost That Will Not Be Affected by Later Decisions

question 26

True/False

A cost that will not be affected by later decisions is termed a sunk cost.

---

Definitions:

Cost Method

An accounting method used to record investments at their original purchase cost, with any changes recognized only when dividends are received or upon sale of the investment.

Fair Value

The amount one would get for selling an asset or the cost to transfer a liability in a regulated exchange among market players on the date of valuation.

Impairment Loss

A recognized reduction in the recoverable amount of a fixed asset or goodwill, indicating that it exceeds its recoverable amount.

Deferred Income Taxes

The accounting concept that recognizes the tax effect of transactions in different periods than when the transactions actually occur.