Which of the Following Is an Example of an Implicit

question 160

Multiple Choice

Which of the following is an example of an implicit cost a firm might incur?

• A)the wages paid to employees
• B)the payment for medical insurance coverage
• C)the opportunity cost to investors of the funds invested in the firm
• D)utility payments

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Definitions:

Plant Asset

Long-lived tangible assets used in the production and distribution of goods and services, such as machinery and equipment.

Systematic

Methodical in procedure or plan; carried out using step-by-step methods leading to predictable outcomes.

Service Life

The estimated period over which a fixed asset is expected to be usable by the entity, impacting its depreciation calculation.

Fair Value

The price at which an asset would be bought or sold in a fair transaction between willing parties.