Fred and Ann Are Both Given Free Tickets to See

question 410

Multiple Choice

Fred and Ann are both given free tickets to see a movie. Both decide to see the same movie. We know that

• A) the opportunity cost of seeing the movie is zero because the tickets were free.
• B) both bear the same opportunity cost of seeing the movie because they are doing the same thing.
• C) both bear an opportunity cost of seeing the movie because they could have done other things instead of seeing the movie.
• D) it is not possible to calculate the opportunity cost of seeing the movie because the tickets were free.

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Definitions:

Allowance Account

A contra asset account that reduces the gross amount of receivables to reflect a more accurate value of expected collections.

Liability Account

An accounting record tracking obligations or debts that a company owes to others.

Credit Balance

Credit Balance refers to the amount of money that a company or individual has in their account that can credit against future purchases or borrowings.