Statement I Costs which do not take the form of cash outlays, nor do they appear in the accounting system are known as opportunity cost.
Statement II Costs in the form of depreciation allowances and unpaid interest on the owner's own funds are known as sunk cost.

A) Both staements are correct B) Both statements are incorrect C) Statement I is correct and Statement II is incorrect D) Statement I is incorrect and Statement II is correct

Answer & Solution

Correct Answer: Option B

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Statement I Costs which do not take the form of cash...

Statement I Costs which do not take the form of cash outlays, nor do they appear in the accounting system are known as opportunity cost. Statement II Costs in the form of depreciation allowances and unpaid interest on the owner's own funds are known as sunk cost.

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Related Questions on Managerial Economics

Statement I Costs which do not take the form of cash outlays, nor do they appear in the accounting system are known as opportunity cost.
Statement II Costs in the form of depreciation allowances and unpaid interest on the owner's own funds are known as sunk cost.