If You Kept Your Money Under Your Mattress Rather Than

question 208

Multiple Choice

If you kept your money under your mattress rather than keeping it in a savings account at your local bank,

• A)you would not incur an opportunity cost.
• B)the opportunity cost of such an action would be the forgone interest of not putting the money in a savings account.
• C)the opportunity cost of such an action would be the gas money it took to drive to the bank.
• D)None of the choices are true.

---

Definitions:

Revenues

The income generated from normal business operations and other activities over a period of time.

Cost Flow Assumption

An accounting principle that determines the method used to assign costs to inventory and to goods sold.

Gross Profit

The gap between income and the expense of products sold, reflecting a company's ability to efficiently handle its workforce and materials during manufacturing.

Ending Inventory

The sum total of items ready for sale calculated at the end of an accounting cycle.