When a Decision Is Made Among a Number of Alternatives

question 36

Multiple Choice

When a decision is made among a number of alternatives, the potential benefit that is lost by choosing one alternative over another is the:

• A)realized cost.
• B)accrued cost.
• C)conversion cost.
• D)opportunity cost.

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Definitions:

Statement of Cash Flows

A financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, categorizing cash activities into operating, investing, and financing activities.

Cash Equivalents

Short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value.

Financing Activity

Transactions and events where cash is raised from creditors and investors to fund the company’s operations and expansions.

Statement of Cash Flows

A financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, dividing activities into operating, investing, and financing activities.