Matching
Presented below are terms preceded by letters a through f and followed by a list of definitions 1 through 6.Match the letter of the terms with the definitions.Use the space provided preceding each definition.
Premises:
An additional cost incurred only if a particular action is taken.
The potential benefits of one alternative that are lost by choosing an alternative course of action.
A cost that cannot be avoided or changed in any way because it arises from past decision; irrelevant to current and future decisions.
A cost that requires a current outlay of cash.
An estimate of an asset's value to the company; calculated by discounting the future cash flows from the investment at a satisfactory rate and then subtracting the initial cost of the investment.
A rate used to evaluate the acceptability of an investment; equals the after-tax periodic income divided by the average investment in the asset.
Responses:
Out-of-pocket cost
Opportunity cost
Sunk cost
Accounting rate of return
Incremental cost
Net present value
Correct Answer:
Premises:
Responses:
An additional cost incurred only if a particular action is taken.
The potential benefits of one alternative that are lost by choosing an alternative course of action.
A cost that cannot be avoided or changed in any way because it arises from past decision; irrelevant to current and future decisions.
A cost that requires a current outlay of cash.
An estimate of an asset's value to the company; calculated by discounting the future cash flows from the investment at a satisfactory rate and then subtracting the initial cost of the investment.
A rate used to evaluate the acceptability of an investment; equals the after-tax periodic income divided by the average investment in the asset.
Premises:
An additional cost incurred only if a particular action is taken.
The potential benefits of one alternative that are lost by choosing an alternative course of action.
A cost that cannot be avoided or changed in any way because it arises from past decision; irrelevant to current and future decisions.
A cost that requires a current outlay of cash.
An estimate of an asset's value to the company; calculated by discounting the future cash flows from the investment at a satisfactory rate and then subtracting the initial cost of the investment.
A rate used to evaluate the acceptability of an investment; equals the after-tax periodic income divided by the average investment in the asset.
Responses:
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