Match the items of List – I with the items of List – II and indicate the code of their correct matching…
Sunk costs are past irrecoverable costs that cannot be altered by varying output (a-ii); opportunity cost is the expected return foregone from the second-best use of…
Choose your answer
Match the items of List – I with the items of List – II and indicate the code of their correct matching :
| List-I | List-II |
|---|---|
| (a) Sunk costs | (i) Costs which do not take the form of cash outlays, nor do they appear in the accounting system |
| (b) Opportunity cost | (ii) Costs which are made once and for all, and cannot be altered, increased or decreased by varying the rate of output, nor can they be recovered. |
| (c) Book costs | (iii) Expected returns from the second best use of the resources that are foregone due to the scarcity of resources. |
| (d) Imputed costs | (iv) Costs in the form of depreciation allowances and unpaid interest on the owner’s own funds |
Answer and explanation
Correct answer D
Sunk costs are past irrecoverable costs that cannot be altered by varying output (a-ii); opportunity cost is the expected return foregone from the second-best use of resources (b-iii); book costs include items like depreciation allowances and unpaid interest on the owner's funds (c-iv); and imputed costs are implicit costs that involve no cash outlay and do not appear in the accounting system (d-i).
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UGC NET Management