The term sunk cost of an asset is all expenses charged to it in the pa

1.	The term sunk cost of an asset is all expenses charged to it in the past
Answer» Explanation: A sunk cost is a cost that has already occurred and cannot be RECOVERED by any means. Sunk costs are independent of any event and should not be considered when making investment or project decisions. Only relevant costs (costs that relates to a SPECIFIC decision and will change depending on that decision) should be considered when making such decisions. All sunk costs are considered fixed costs. However, it is IMPORTANT to realize that not all fixed costs are considered sunk costs. Recall that sunk costs cannot be recovered. Take for example equipment (a fixed cost). Equipment can be RESOLD or returned at a DETERMINED price, therefore it is not a sunk cost.

The term sunk cost of an asset is all expenses charged to it in the past

Answer»

Explanation:

A sunk cost is a cost that has already occurred and cannot be RECOVERED by any means. Sunk costs are independent of any event and should not be considered when making investment or project decisions. Only relevant costs (costs that relates to a SPECIFIC decision and will change depending on that decision) should be considered when making such decisions.

All sunk costs are considered fixed costs. However, it is IMPORTANT to realize that not all fixed costs are considered sunk costs. Recall that sunk costs cannot be recovered. Take for example equipment (a fixed cost). Equipment can be RESOLD or returned at a DETERMINED price, therefore it is not a sunk cost.

Discussion

No Comment Found

Related InterviewSolutions

A bakery produces cakes, biscuits and breads. These products should be treated as ___________
65. The profits of last five years are Rs. 85.000 Rs. 90.000 R$ 70,000 Rs. 100.000 and Rs. 80.000the value of goodwill if it is calculated on average profits of last five years on the basis of 3 yearpurchase(a) Rs. 85.000(b) R$ 2.55,000(c) Rs. 2,75.000(d) Rs. 2,85.000
201PrivQtransportation on it.Jan 20Jan 25Jan 30Paid by cheque Rs. 49,500 to Asim Traders in full settlement of their account.Deposited the cheque in the Bank, received on January 15.Mr. Akbar purchased a Mobile Phone for his personal use from the business cash Rs.5,000.Jan 31 Paid Rent in advance by a cheque of Rs. 10,000 for office building.REQUIRED:Prepare General Journal Entries.Q46. Mr. Akbar started his business on January 1st 2014 by investing cash Rs. 90,000 and Equip-ment worth Rs. 50,000. During the month the following transactions were completed:Jan 05 Purchased merchandise on credit Rs. 50,000 from Asim Traders and paid Rs.2,000 forJan 07 Sold merchandise on credit Rs. 16,000 and for Cash Rs. 15,000 to Mr. Khalid.Jan 15 Received a cheque of Rs. 15,000 from Mr. Khalid in full settlement of his account.
Kartik is a sole proprietor & who deals in fibres. He was planning to take some concrete and vital decisions regarding converting his business to a partnership business or rather wind up his current business. From the following Balance Sheet, as at 31.12.2013 and the projected trial balance for 2014, prepare necessary statements and give suggestions in decision making.
Income and expenditure subscription advance add or less
. __________does not deal with the accumulation, classification, analysis, allocation,summarization, interpretation, reporting and control of current and perspective
ख्याति का मूल्यांकन5. एक फर्म की ख्याति की राशि गत चार वर्षों के औसत लाभके तीन गुने के बराबर आंकी जाती है। ख्याति की राशि ज्ञातकीजिए जबकि गत चार वर्षों के लाभ इस प्रकार हैं : प्रथमवर्ष लाभ 5,000 ₹, द्वितीय वर्ष हानि 500 ₹, तृतीय वर्षलाभ 3,000 ₹, चतुर्थ वर्ष हानि 1,500 ₹।(उत्तर : ख्याति 4,500 )
1. Macroeconomics is the study of _____________a. Individual Householdsb. Total Income earned by an economyc. Average Income earned by an economyd. Totals and average income earned by the economy
1. Macroeconomics is the study of _____________
Tois question based GISTBasie Prodquet? Gust Sales SupplyАB 2200150800118.00 to 20018.001 300 Intre statoI istrustile12.00 lo1120 Istrestaleb.Tabb Trade Details (sales and purchaseJitems opening stat I purchased sold closingo0104803oa) find out belowgiveoQuestionsCGST ,SGST , LGST final balance?1. use different lable for saleand purchas drade.Neft profit from the trade?closing stock valuations ?