Cash flows that could be realized from the best alternative use of an owned asset are called ________.

Question

Quizplus · Accepted Answer

Opportunity costs refer to the cash flows that could be obtained from the best alternative use of an owned asset. It is important to consider opportunity costs in decision making to ensure that the chosen option maximizes the value of resources since choosing one option often means giving up the benefits that could be gained from the other option. The other options listed (incremental costs, lost resale opportunities, and sunk costs) do not pertain to the cash flows that could be realized from the best alternative use of an owned asset.

Cash Flows That Could Be Realized from the Best Alternative