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Increasing trend of electronic banking or transactions which is many a times are called cashless transactions can be considered in which of the following type of cost?
Cash cost
Book cost
Opportunity cost
None of the above
Cash cost
Cash costs represent the actual flow of money out of an organization resulting from a transaction. Since electronic or cashless transactions involve the immediate or near-immediate transfer of funds from one account to another through a banking system, they constitute a direct cash outflow.
Cash costs represent the actual flow of money out of an organization resulting from a transaction. Since electronic or cashless transactions involve the immediate or near-immediate transfer of funds from one account to another through a banking system, they constitute a direct cash outflow.
TCcashтАЛ=тИСCdigitalтАЛ+тИСCphysicalтАЛ тАФ Total Cash Cost summation
In engineering economics, a cost is classified as a 'cash cost' if it involves a tangible movement of liquid assets or currency. Cashless transactions utilize digital payment gateways (like UPI, NEFT, or IMPS) to facilitate this transfer, where the electronic debit acts as a direct substitute for the physical movement of banknotes.
Cash costs involve the actual exchange of money, regardless of the medium (digital or physical).
Book costs are non-cash items, such as depreciation or amortization, which represent value reduction without cash movement.
Opportunity costs represent the potential benefit foregone by choosing one alternative over another.
High transparency in accounting.
Elimination of manual counting errors.
Real-time financial tracking for engineering project management.
Dependency on digital infrastructure.
Potential for transactional service fees.
Procurement of raw materials for engineering projects.
Payment of labor and contract wages.
Routine utility bill payments in industrial units.
Book cost involves accounting entries without cash movement (e.g., depreciation).
Opportunity cost is a theoretical cost not reflected in standard ledger books.
In economics, if a transaction is recorded as an immediate debit to the cash/bank account, it is explicitly a cash cost.
A is correct тАФ Electronic transactions involve a direct outflow of funds from an account, classifying them as cash costs.
Always differentiate between 'Cash Costs' (actual cash flow) and 'Book Costs' (non-cash adjustments like depreciation) in project economics as this is a frequent trap in professional engineering exams.