When Making a Decision, It Is Often More Difficult to Identify

question 137

Multiple Choice

When making a decision, it is often more difficult to identify the ______ associated with the decision because ______.

• A) costs; an individual must weigh monetary costs and opportunity costs differently
• B) costs; an individual should consider opportunity costs but ignore sunk costs
• C) benefits; it is impossible to put a dollar value on benefits
• D) benefits; individual people identify benefits while firms identify costs

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Definitions:

Financial Capital Maintenance

An accounting concept that income is only recognized after the amount of the investor's capital has been maintained, or the financial position is at least as good at the end of the period as at the beginning.

Net Assets

The total assets of an entity minus its total liabilities, indicating the entity’s net worth or equity.

Common Stock

Equity securities that represent ownership interests in a corporation, providing voting rights and entitling the holder to a share of the company's success through dividends and/or capital appreciation.

Expense Recognition

An accounting principle that dictates the conditions under which expenses are recognized and reported in financial statements.