Opportunity Cost
Accounting glossary · Understand, connect, apply
Opportunity cost is the benefit sacrificed by choosing one alternative instead of the best available alternative. It can matter even when no payment or accounting entry records the sacrifice.
Example
Using a machine for a special order prevents another job that would earn 1,200 contribution. That lost contribution is an opportunity cost of accepting the special order.
Remember the difference
Use the net benefit actually forgone, not automatically the other job’s sales revenue. Avoid counting the same lost benefit twice when comparing options.
Browse the accounting glossary → · Follow a learning path
Published 4 November 2026. Prepared with AI assistance; examples are fictional and simplified for learning.
Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.
Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.
← Return to the accounting glossary