Sunk Costs

question 86

Multiple Choice

Sunk costs

• A) reflect the best alternative use of your money.
• B) will eventually be refunded.
• C) arise from illegal use of inputs.
• D) include marginal opportunity costs.
• E) cannot be reversed.

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Definitions:

Capital

The financial resources that businesses use to fund their operations and growth.

Closing Process

The final steps in the accounting cycle used to update the financial records for the period's revenues, expenses, and dividends to prepare for the next accounting period.

Income Statement

A financial statement that shows a company's revenue and expenses over a specific period, illustrating the company's profit or loss.

Income Summary Account

A temporary account used in closing process to transfer the balances of all revenue and expense accounts to Retained Earnings.