If You Own a Building and You Decide to Use

question 153

Multiple Choice

If you own a building and you decide to use that building to open a restaurant,

• A)there are no sunk costs involved in this decision.
• B)there is no opportunity cost of using this building for a restaurant because you own it.
• C)the only cost relevant to this decision is the price you paid for the building.
• D)there is an opportunity cost of using this building for a restaurant because it could have been used in other ways.

Recognize the process and accounting treatments for issuing stock above or at par value.

Understand the calculation and significance of retained earnings within stockholders' equity.

Journalize transactions involving the issuance of common and preferred stock.

Comprehend the roles of dates of declaration, record, and payment in dividend distribution.

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Definitions:

Income Statement

A financial statement that reports a company's financial performance over a specific accounting period, detailing revenues, expenses, and net income or loss.

Terms 2/10, N/30

Payment terms indicating a 2% discount is available if payment is made within 10 days; otherwise, the net (full) amount is due within 30 days.

Gross Price Method

A pricing strategy where the price of a product or service includes all taxes, tariffs and fees that may apply to the transaction.

Sales Discounts

A reduction in the price of a product or service that is offered to a customer to encourage timely payment.