Which of the Following Would Be an Example of an External

question 87

Multiple Choice

Which of the following would be an example of an external benefit?

• A) More people start to ride the bus and as a result air pollution is reduced.
• B) Firms are able to reduce their costs of production by using a more efficient technology.
• C) The government requires polluting firms to pay a special tax.
• D) A firm has just gotten permission to open a landfill on property that is adjacent to your home.

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Definitions:

Bond Payable

A financial instrument representing a loan made by an investor to a borrower, typically corporate or governmental, with a promise to pay back the principal along with interest on specified dates.

Operating Activities

Activities that constitute the primary or main activities of a company, such as selling goods and services, which are reflected in the income statement.

Statement Of Cash Flows

A financial statement that provides aggregate data regarding all cash inflows and outflows a company receives.

Direct Method

In cash flow accounting, this method itemizes major classes of gross cash receipts and payments, providing a more detailed view of a company's cash flows from operating activities.