Martha Stewart Does Not Do Her Own Ironing Because She

question 130

Multiple Choice

Martha Stewart does not do her own ironing because she:

• A) is not very good at ironing.
• B) has an absolute advantage in ironing.
• C) has a comparative advantage in something else.
• D) has a comparative advantage in ironing.

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Definitions:

Cash Basis

An accounting method where revenues and expenses are recognized only when cash is exchanged, as opposed to when they are incurred.

Permanent Account

An account that is not closed at the end of the accounting period and its balances are carried forward into the next period.

Temporary Account

An account used in accounting that is closed at the end of each accounting period, transferring its balance to a permanent account.

Cash Sales

Transactions where payment for goods or services is made at the time of sale in cash or equivalent forms.