Which of the Following Is Most Likely to Be an Implicit

question 194

Multiple Choice

Which of the following is most likely to be an implicit cost of production?

• A) property taxes on a building owned by the firm
• B) transportation costs paid to a trucking supplier
• C) rental payments for a building utilized by the company and rented from another party
• D) interest income foregone on funds invested in the firm by the owners

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Definitions:

Pre-acquisition Equity

Refers to the equity interest in a company that exists before it is acquired by another entity.

Post-acquisition Equity

The equity interest in a subsidiary held by the parent company after accounting for any changes since the acquisition date.

Accounting Policies

The particular standards, foundations, norms, regulations, and methods used by an organization to compile and display its financial records.

Consolidation Process

The method of combining and presenting the financial data of a parent company and its subsidiaries as one entity's financial statements.