Rational Choice

question 69

Multiple Choice

Rational choice:

• A) is always efficient.
• B) is a choice that uses the available resources to best achieve the objective of the person making the choice.
• C) provides the answer to only the 'how?' question.
• D) is made by comparing different incentives.
• E) is what you must give up to get what you want

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Definitions:

Cost of Goods Sold

Direct costs attributable to the production of goods sold by a company, including material, labor, and manufacturing overhead expenses.

Ending Inventory

Merchandise value ready for sale at the close of an accounting cycle.

Consistency Principle

An accounting standard that mandates entities to apply the same accounting methods and practices from period to period.

Expense Recognition Principle

This principle dictates that expenses should be recognized in the accounting period when they are incurred, not necessarily when they are paid, matching expenses to the revenues they help generate.