Which of the Following Activities Can Create an External Cost

question 25

Multiple Choice

Which of the following activities can create an external cost?

• A)Honking continuously while driving past a hospital.
• B)Reducing the use of plastic carry bags while shopping.
• C)Burying garbage under the soil and planting trees on it.
• D)Using smog controls on private cars.

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Definitions:

FIFO

First-In, First-Out, an inventory valuation method where goods first bought are the first to be sold, assuming that the oldest inventory items are sold before newer ones.

Costs

The amount of money expended or resources used in the production of goods or in providing services.

Average Cost Method

An inventory valuation method wherein the cost of goods sold and ending inventory is determined by taking the weighted average of all purchases.

Periodic Inventory System

An inventory accounting system where updates to the inventory accounts occur at specific intervals, such as monthly or yearly, as opposed to continuously.