Scenario 13-4 Suppose That Abdul Opens a Coffee Shop. He Receives a Receives

question 334

Multiple Choice

Scenario 13-4
Suppose that Abdul opens a coffee shop. He receives a loan from a bank for $100,000. He withdraws $50,000 from his personal savings account. The interest rate on the loan is 8%, and the interest rate on his savings account is 2%.
-Refer to Scenario 13-4. Abdul's implicit cost of capital is

• A) $8,000.
• B) $4,000.
• C) $2,000.
• D) $1,000.

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Definitions:

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting the decrease in value over time.

Unadjusted Trial Balance

A financial report that lists all accounts and their balances before adjustments, used to ensure debits equal credits.

Accrual Accounting

An accounting method where revenue and expenses are recorded when they are earned or incurred, regardless of when the cash is received or paid.

Incurred

Describes expenses that have been realized or experienced by a business or individual.