T Operates a Hardware Store, Selling Primarily to the Public

question 36

Multiple Choice

T operates a hardware store, selling primarily to the public.The company's average sales are $900,000.Which of the following costs must it capitalize in accounting for its inventory?

• A)Freight
• B)Utility costs of a warehouse several miles from the retail outlet
• C)An allocable portion of general and administrative costs
• D)Salary cost of person in charge of purchasing inventory
• E)More than one of the above

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Definitions:

Behavioral Economics

A field of economics that applies psychological insights into human behavior to explain economic decision-making.

Financial Gain

The increase in equity or wealth that an individual or company experiences, typically measured in terms of net profit or income.

Fairness

A principle relating to justice, equity, and impartiality within the allocation of resources or treatment of individuals.

Endowment Effect

The phenomenon in which people ascribe more value to things merely because they own them.