Question

Distinguish between sunk capital and floating capital.

Answer 1

Sunk Capital -

Sunk capital is that category of capital which can be used to produce only one type of commodity or services. Examples: An ice factory, oil mill etc.

Floating Capital -

Floating capital includes all such items which can be put to alternate uses. The use of such commodities is not restricted for any specific purpose. Examples: Money, fuels, etc.