If a Firm Buys a Delivery Van for $18,000 and Can

question 99

Multiple Choice

If a firm buys a delivery van for $18,000 and can resell it in 2 years for $7,500, the opportunity cost of using the van is

• A)$10,500.
• B)$7,500.
• C)$18,000.
• D)$3,750.

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Definitions:

Expense

Money spent or cost incurred in an entity’s efforts to generate revenue, representing the cost of doing business.

Unearned Revenue

Money received by a company for goods or services yet to be provided, considered a liability until the service or product is delivered.

Liability

Financial obligations or debts that a company owes to others, reflected on the balance sheet.

Drawing Account

An account used to record withdrawals of cash or other assets by the owner for personal use, reducing owner's equity.