Correct Answer:
D. Has already been incurred and cannot be recovered, so it is irrelevant to future decisions
Sunk costs are past costs that do not change with any decision.
November 13, 2026 · Accounting and Finance MCQs, Cost & Management Accounting MCQs
A sunk cost is a cost that:
Related MCQs
According to IAS 2, inventories are measured at:
A.
The higher of cost and selling price
B.
Selling price always
C.
The lower of cost and net realizable value
D.
Replacement cost only
Correct answer is:
C. The lower of cost and net realizable value
Do you agree with this answer?
The free-rider problem arises mainly in the case of:
A.
Private goods
B.
Luxury goods
C.
Public goods
D.
Inferior goods
Correct answer is:
C. Public goods
Do you agree with this answer?
Which of the following is NOT a component of internal control in the COSO framework?
A.
Audit sampling
B.
Control environment
C.
Risk assessment process
D.
Monitoring of controls
Correct answer is:
A. Audit sampling
Do you agree with this answer?
Actual labor rate is Rs. 22 per hour, standard rate is Rs. 20 and actual hours are 100. The labor rate variance is:
A.
Rs. 200 favorable
B.
Rs. 2,000 adverse
C.
Rs. 200 adverse
D.
Rs. 220 favorable
Correct answer is:
C. Rs. 200 adverse
Do you agree with this answer?
A transfer price is:
A.
The price charged to external customers
B.
The price of raw materials from suppliers only
C.
The price at which goods or services are transferred between divisions of the same organization
D.
A government-regulated price
Correct answer is:
C. The price at which goods or services are transferred between divisions of the same organization
Do you agree with this answer?
Professional skepticism means the auditor:
A.
Maintains a questioning mind and critically assesses audit evidence
B.
Assumes management is dishonest
C.
Accepts management explanations without verification
D.
Avoids communicating with management
Correct answer is:
A. Maintains a questioning mind and critically assesses audit evidence
Do you agree with this answer?
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