The Most Important Implicit Cost Generally Omitted from the Accounting

question 125

Multiple Choice

The most important implicit cost generally omitted from the accounting statement of a firm is the

• A) rental cost of machinery.
• B) cost of compliance with government regulations.
• C) opportunity cost of the equity capital invested by the owners.
• D) accounting cost incurred as the result of tax compliance.

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Definitions:

Wharfage

A fee charged for the use of a wharf for loading or unloading cargo, or for the temporary storage of goods on the wharf area.

Sell-Off

Transaction in which assets are sold by one firm to another.

Commercial Paper

An unsecured, short-term debt instrument issued by corporations, typically used for the financing of accounts receivable, inventories, and meeting short-term liabilities.

Discount Size

Pertains to the magnitude or amount of reduction in price offered on goods or services, often used as a sales promotion technique to increase consumer demand or clear inventory.