Opportunity cost

Opportunity cost is the cost of not selecting the next best choice when investing resources in an activity. Opportunity cost can be used to weigh the merits of various capital investment opportunities.

For example, the opportunity cost of taking a training program is the pay that would otherwise have been earned during the training period.

Opportunity cost is not an accounting concept, and so does not appear in the financial records of an entity. It is strictly a financial analysis concept.