10 Questions
How does an outlay cost differ from an opportunity cost?
An outlay cost represents an outflow of cash and will ultimately end up on financial statements, while an opportunity cost does not require an outlay of cash and will never show up on financial statements.
Which of the following best describes an opportunity cost?
It does not require an outlay of cash and represents the foregone benefit from the best alternative course of action.
What does an outlay cost represent?
An outflow of cash that will ultimately end up on financial statements.
Which of the following represents the forgone benefit from the best alternative use of a resource?
Opportunity cost
In the context of a college education, what type of cost are the cash outflows for tuition, books, and fees?
Outlay cost
Which of the following best describes an outlay cost?
A cost that represents a cash outflow in the past, present, or future
What does an opportunity cost represent?
A forgone benefit from the best alternative course of action
In the context of a college education, what type of cost are the cash outflows for tuition, books, and fees?
Outlay cost
What is the distinguishing characteristic of an opportunity cost compared to an outlay cost?
Does not require an outlay of cash
Which of the following is true regarding the representation of outlay cost and opportunity cost on financial statements?
Outlay cost will ultimately end up on financial statements, while opportunity cost will never show up on financial statements
Test your knowledge of the fundamentals of cost accounting with this quiz based on key concepts from "Fundamentals of Cost Accounting" by Lanen, Anderson, and Maher, and "Cost Accounting: Foundation and Evaluation" by Kinney and Raiborn. Check your understanding of cost definition, measurement, and more!
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