Table 3-28 Barb and Jim Run a Business That Sets Up and Up

question 259

Multiple Choice

Table 3-28
Barb and Jim run a business that sets up and tests computers. Assume that Barb and Jim can switch between setting up and testing computers at a constant rate. The following table applies.
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-Refer to Table 3-28. Barb's opportunity cost of setting up one computer is testing

• A)4/5 computer and Jim's opportunity cost of setting up one computer is testing 3/4 computer.
• B)4/5 computer and Jim's opportunity cost of setting up one computer is testing 4/3 computers.
• C)5/4 computers and Jim's opportunity cost of setting up one computer is testing 3/4 computer.
• D)5/4 computers and Jim's opportunity cost of setting up one computer is testing 4/3 computers.

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Definitions:

Permanent/Temporary

In accounting, refers to the classification of accounts based on their longevity; permanent accounts are cumulative over time (e.g., assets, liabilities, equity), while temporary accounts are closed at the end of each accounting period (e.g., revenues, expenses).

Normal Balance

The side (debit or credit) on which increases to the account are recorded, based on the type of account (asset, liability, equity, revenue, expense).

Financial Statement

A written report that quantitatively describes the financial health of a company, including balance sheets, income statements, and cash flow statements.

Permanent/Temporary

Classification of accounts where permanent accounts are balance sheet items carrying over to the next financial period, while temporary accounts are income statement items closed at the end of the period.