Final answer:
The claim that cost implies an expected loss to the company is false. Costs are incurred to acquire benefits like profits, and not necessarily losses. Opportunity cost represents the value of the foregone alternative when a choice is made.
Step-by-step explanation:
The statement that cost is the cash or cash equivalent value sacrificed for goods and services that are expected to bring a current or future loss to the company is false. Cost represents the value sacrificed to acquire goods or services, but it does not necessarily imply a loss for the company. Instead, costs are incurred with the expectation of deriving future benefits, such as generating sales and profits from selling goods or providing services. For instance, purchasing inventory represents a cost because the company sacrifices cash to acquire goods that it intends to sell for a profit.
Understanding opportunity cost is crucial for making informed economic decisions. It is the value of the next best alternative forgone as a consequence of making a particular choice. For example, if Alphonso decides to buy a burger rather than spending the same amount on bus tickets, the opportunity cost is the value of the transportation he has to give up. In terms of profits, the difference between accounting profit and economic profit is noteworthy. Accounting profit is the total revenue minus explicit costs, whereas economic profit subtracts both explicit and implicit costs, including opportunity costs, from total revenue.