Johnny has worked as a CPA for five years and wants to open his own public accounting practice.The cost of his college degree in accounting represents
A) the opportunity cost of this endeavor.
B) a sunk cost.
C) an expense.
D) a variable cost.

Question

Quizplus · Accepted Answer

The cost of Johnny's college degree in accounting is a sunk cost because it has already been incurred and cannot be recovered. It is not relevant to his decision to open his own public accounting practice. The opportunity cost of this endeavor would be the potential income he could earn by working for someone else instead of starting his own business. Expenses and variable costs are ongoing costs associated with running a business.

Johnny Has Worked as a CPA for Five Years and Wants