Sunk costs are usually defined as previously incurred costs that are not recoverable and should not be taken into account in decision making. Here is a slightly modified example of a sunk cost from Jerold Zimmerman’s “Accounting for Decision Making and Control” (Irwin McGraw-Hill):
Example. Abadabba Berman, the comptroller of the Schultz Cement Shoe Company, [...]
Accounting provides some measure of a firm’s economic efficiency on its income statement. A large net income usually tells us that something has gone right, while a large loss indicates that something is amiss. The same cannot be said about a non profit’s income statements (usually called the Statements of Revenue and Expense). Since [...]
Microsoft Excel spreadsheets are an indispensable tool for accountants, being widely used to create financial statements as well as to produce many other types of financial reports including budgets, forecasts, cash flow and financial models. Many accountants consider themselves to be experts in using Excel but the reality is that the majority are self taught [...]
While attending a recent annual conference I ran into Jim-just as I do each and every year. Jim is short and stout, usually a little disheveled but typically with a jovial attitude-A Santa Claus without the boots, red robe and “ho ho ho”. This time, however, something was different. He wore a [...]