Which Statement BEST Describes a Negative Externality

question 117

Multiple Choice

Which statement BEST describes a negative externality?

• A)Your neighbor loves to bake bread and always brings you a loaf fresh and hot from the oven.
• B)Your neighbor has an ornamental pond that breeds mosquitoes.
• C)Your neighbor has invested in beautiful landscaping,increasing the value of all of the houses on the block.
• D)Your neighbor has a pool and has given you an open invitation to come over and swim.

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Definitions:

Financial Accounting Reports

Formal documents that communicate an organization's financial performance and position to external stakeholders, including income statements and balance sheets.

GAAP

Generally Accepted Accounting Principles; a set of rules and standards for financial reporting used in the United States.

Prime Costs

The combined total of direct labor and direct materials cost incurred in the manufacturing of products.

Direct Materials

Raw materials that are directly traceable to the production of a specific product and are an integral part of the finished product.