Difference between revisions of "Sunk cost"

From Conservapedia
Jump to navigation Jump to search
(a start)
 
m
 
Line 1: Line 1:
−
A '''sunk cost''' is money already expended without ability to retrieve the funds.
+
A '''sunk cost''' is an expenditure on a project which has already been made and cannot be reversed.
  
−
A sunk cost is different from ongoing and future expenses by a business. Sunk costs should be excluded from future decision-making because the cost was incurred and cannot change regardless of future revenue and expenses.
+
The term is most commonly used with regards to decision making on a project. In that context, the sunk costs are those already spent; the decision would be whether or not to continue to spend money on the project (in hopes that the project will earn at least what was spent, and hopefully much more), or terminate the project and chalk it up as a loss.
  
−
Sunk costs are not relevant costs, which are costs not yet incurred.
+
[[category:Economics]]
−
 
+
[[Category:Accounting Terms]]
−
Simply put, sunk costs are unrecoverable, so forget about them and make decisions based on future revenue and expenses.
 
−
[[category:economics]]
 

Latest revision as of 22:00, December 13, 2020

A sunk cost is an expenditure on a project which has already been made and cannot be reversed.

The term is most commonly used with regards to decision making on a project. In that context, the sunk costs are those already spent; the decision would be whether or not to continue to spend money on the project (in hopes that the project will earn at least what was spent, and hopefully much more), or terminate the project and chalk it up as a loss.

Retrieved from "https://www.conservapedia.com/index.php?title=Sunk_cost&oldid=1713062"