Which of the Following Is True About Explicit Costs

question 153

Multiple Choice

Which of the following is true about explicit costs?

• A) They are the opportunity costs of production.
• B) They are out-of-pocket expenses.
• C) They are not measured in terms of dollars.
• D) They are not included when measuring economic profit.
• E) They are not included when measuring accounting profit.

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Definitions:

Liquid Assets

Assets that can be quickly and easily converted into cash with minimal impact on their value.

Cash Equivalents

Short-term investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value.

Receivables

Amounts owed to a company by its customers or other parties for goods or services that have been delivered or used, but not yet paid for.

Income Statements

Financial statements that report a company's financial performance over a specific accounting period, detailing revenues, expenses, and profits.