______ refers to money that has already been spent and which cannot be recovered.

Options

A. Replacement cost
B. Opportunity cost
C. Imputed cost
D. Sunk cost

Answer

A

Explanation

Replacement cost is the cost of replacing an asset, plant, machinery, equipment etc. Opportunity cost refers to the cost of the next best alternative foregone in order to pursue the chosen action. Imputed cost are hypothetical costs which are considered just for the purpose of decision making and do not involve any actual cash outflow. Sunk cost is the cost which is not altered by a change in current business activity. It can be understood as an irrevocable cost of the past business activity which has to be incurred now and is irrelevant to the current business scenario.