Alan Is a Retired Economist Who Enjoys Building Toy Trains

question 28

Multiple Choice

Alan is a retired economist who enjoys building toy trains for his grandkids.He uses a workbench and tools from his garage,lumber he bought from the lumber store for $10,and varnish and paint he had left over from another project last year.Since a retired economist is always an economist,which of the following statements does he make about building toy trains?

• A) I'm not paying for any resources,so the toy trains I'm building are a good example of free goods.
• B)I only paid $10 for the lumber,so the toy trains I'm building are a good example of free goods.
• C)I'm using scarce resources to build the toy trains.
• D)The resources I'm using to build the toy trains are not scarce.
• E)If I had used lumber that I cut from the tree in my backyard instead of buying it from the store,then the toy trains I'm building would be a good example of free goods.

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Definitions:

Petty Cash Fund

A modest sum of money held in reserve for small or unplanned expenses.

Cash Replenishment

The process of refilling a petty cash fund to its designated level after it has been depleted through use.

Journal Entry

The basic record of a financial transaction in an accounting system, noted by debits and credits to various accounts.

Tangible Frauds

Deceptive acts involving the manipulation or misuse of physical assets or goods for illegal gain.