Question

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 _____.

Answer 1

Johnny's college degree in accounting represents a sunk cost. A sunk cost refers to a cost that has already been incurred and cannot be recovered. It shouldn't influence Johnny's decision to open his own public accounting practice, as it's a cost that he has already paid regardless of his future choices. Future decisions should be based on prospective costs and benefits, not past expenditures.