Opportunity costs are:
A) If significant in amount, deductible for U.S. federal income tax purposes.
B) Usually variable costs.
C) Equal to historical costs.
D) Recorded in accounting records at estimated fair value.
E) Relevant for decision making.

Question

Quizplus · Accepted Answer

Opportunity costs refer to the benefits forgone when choosing one option over another. These costs are not recorded in accounting records, but they are relevant for decision making. Therefore, option E is the correct choice. Option A is incorrect because opportunity costs are not deductible for U.S. federal income tax purposes. Option B is incorrect because opportunity costs are not variable costs. Option C is incorrect because opportunity costs are not equal to historical costs. Option D is incorrect because opportunity costs are not recorded in accounting records at estimated fair value.

Opportunity Costs Are