Asked by Theresa Quinn on May 09, 2024
Verified
Pete owns a shoe-shine business. His accountant most likely includes which of the following costs on his financial statements?
A) Shoe polish and wages Pete could earn delivering newspapers
B) Shoe polish and rent on the shoe stand
C) Wages Pete could earn delivering newspapers and interest that Pete's money was earning before he spent his savings to set up the shoe-shine business
D) Rent on the shoe stand and interest that Pete's money was earning before he spent his savings to set up the shoe-shine business
Financial Statements
Official records that detail the financial activities and condition of a business or individual, including the balance sheet, income statement, and cash flow statement.
Shoe Polish
A product used to improve the appearance of shoes, typically by increasing shine and providing a degree of protection.
Delivering Newspapers
The process or occupation of distributing newspapers to subscribers or households.
- Distinguish between explicit and implicit costs, providing examples for both.
- Understand how fixed and variable costs contribute to total costs and how this affects business decisions.
Verified Answer
NS
Nurintan ShahiraMay 09, 2024
Final Answer :
B
Explanation :
Shoe polish and rent on the shoe stand are direct costs associated with running the shoe-shine business and would be included in the financial statements. The other options include opportunity costs, which are not recorded in financial statements.
Learning Objectives
- Distinguish between explicit and implicit costs, providing examples for both.
- Understand how fixed and variable costs contribute to total costs and how this affects business decisions.