An Example of an Explicit Cost Is

question 126

Multiple Choice

An example of an explicit cost is

• A) a payment on a loan for a computer.
• B) the savings interest lost by investing $10,000 in capital instead of saving the money.
• C) forgone wages.
• D) the opportunity cost of a $50,000 investment into a building.
• E) the amount of money one could receive for renting a company truck to another business.

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Definitions:

Bad Debt Expense

An expense recognized by businesses for accounts receivable that are not expected to be collected.

Credit Basis

The terms and conditions under which credit is extended by a lender to a borrower, including repayment schedules and interest rates.

Operating Expense

Expenses incurred during the normal operation of a business, excluding costs related to production or direct services.

Allowance for Doubtful Accounts

A contra-asset account that estimates the amount of receivables that may not be collectible.