Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

1. Introduction to Accounting

Types of Accounting

Financial Accounting

1. Introduction to Accounting

Types of Accounting

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Multiple Choice

Which of the following is an irrelevant cost when making a future business decision?

Incremental cost

Sunk cost

Variable cost

Opportunity cost

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Verified step by step guidance

Understand the concept of relevant and irrelevant costs: Relevant costs are those that will influence a future business decision, while irrelevant costs are those that do not affect the decision-making process.

Define sunk cost: A sunk cost is a cost that has already been incurred and cannot be recovered. Since it cannot be changed or influenced by future decisions, it is considered irrelevant for decision-making.

Compare sunk cost with other costs listed: Incremental costs, variable costs, and opportunity costs are all relevant costs because they can change depending on the decision being made. Sunk costs, however, remain fixed and are not influenced by future actions.

Focus on the decision-making process: When evaluating costs for a future business decision, exclude sunk costs from the analysis as they do not provide any actionable insight or impact on the outcome.

Conclude that sunk costs are irrelevant: Based on the definitions and characteristics of the costs provided, sunk costs are the correct answer to the question as they are irrelevant in making future business decisions.