A cost that requires a future outlay of cash, and is relevant for current and future decision making, is a(n):
A) Opportunity cost.
B) Sunk cost.
C) Uncontrollable cost.
D) Out-of-pocket cost.
E) Operating cost.

Question

Quizplus · Accepted Answer

An out-of-pocket cost refers to an expense that requires future cash outflows, and it is relevant for current and future decision making. Out-of-pocket costs are usually tangible and measurable, and they can include expenses such as salaries, rent, and utilities. The other options do not fit the description of a cost that requires a future outlay of cash and is relevant for current and future decision making; opportunity cost is the cost of foregone alternatives, sunk cost is a cost that has already been incurred and cannot be recovered, uncontrollable cost is a cost that cannot be influenced by management decisions, and operating cost refers to the cost of running a business.

A Cost That Requires a Future Outlay of Cash, and Is