________ costs each year do not reflect cash flow because the actual purchase and installation (outflow of dollars)of the asset have already taken place.
A)Depreciation
B)Sunk
C)Opportunity
D)Working Capital

Question

Quizplus · Accepted Answer

Depreciation is a non-cash expense that reflects the decrease in the value of an asset over time, due to wear and tear, obsolescence, or other factors. Therefore, it does not involve any actual outflow of dollars, but it is used to allocate the original cost of the asset over its useful life for accounting purposes. Sunk costs are costs that have already been incurred and cannot be recovered, such as the purchase and installation of the asset, and they are not relevant for future decisions. Opportunity costs refer to the benefits foregone by choosing one alternative over another, and they are a measure of the next best alternative that could have been chosen instead. Working capital refers to the current assets and liabilities that are used to finance the daily operations of a business, such as inventory, accounts receivable, and accounts payable.

________ Costs Each Year Do Not Reflect Cash Flow Because