Multiple Choice QuestionA(n) ______ cost requires a future outlay of cash and is relevant for decisions.Multiple choice question.sunkout-of-pocketopportunityhistorical
Question
Multiple Choice QuestionA(n) ______ cost requires a future outlay of cash and is relevant for decisions.Multiple choice question.sunkout-of-pocketopportunityhistorical
Solution
The correct answer is "out-of-pocket". This is because out-of-pocket costs require a future outlay of cash and are therefore relevant for decisions. Sunk costs, opportunity costs, and historical costs do not necessarily require a future outlay of cash. Sunk costs are costs that have already been incurred and cannot be recovered. Opportunity costs are the potential benefits an individual, investor, or business misses out on when choosing one alternative over another. Historical costs are the original cost of an asset, as recorded in an entity's accounting records.
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