Brooke and Sandy Both Attend the Same College and Have

question 91

Multiple Choice

Brooke and Sandy both attend the same college and have the same expenses for tuition, books, and supplies. However, Brooke is a famous actress who could earn $2 million per year if she were not attending college whereas Sandy could earn $10,000 a year serving hamburgers if he were not attending college. It follows that the opportunity cost of attending college:

• A) is the same for both Brooke and Sandy.
• B) is greater for Brooke than for Sandy.
• C) is greater for Sandy than for Brooke.
• D) for Brooke and Sandy cannot be compared.

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Definitions:

Purchase Order

A formal document issued by a buyer to a seller, detailing the products or services ordered and the agreed-upon prices.

Accounts Payable

Liabilities of a business that are due to suppliers and creditors for goods, services, or supplies purchased on credit but not yet paid for.

Restricted Fund Method

An accounting approach used for reporting funds that have restrictions placed on them by donors or grantors.

Deferral Method

An accounting technique that postpones the recognition of income or expenses until a future date.