Accounting Statements Do Not Report Opportunity Costs

question 5

Multiple Choice

Accounting statements do not report opportunity costs. Businesses in existence for longer time would have more assets that have appreciated in value. Explain why such businesses would be more likely to suffer from status quo bias.

• A) These older businesses may not be aware of alternative uses of their assets which would yield more profit. So, they would remain in status quo.
• B) The assets that have appreciated in value would have substantial opportunity costs.
• C) Owing to status quo bias, older businesses would overlook the opportunity costs of appreciated assets.
• D) None of the above.

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