Which of the Following Transactions Will Not Result in the Recognition

question 3

Multiple Choice

Which of the following transactions will not result in the recognition of an expense?

• A) Interest accrued on a bank loan
• B) Declaration and payment of a dividend
• C) Use of machinery during the period
• D) Expiration of prepaid insurance

---

Definitions:

Positive Economic Profits

Occurs when the total revenues of a firm exceed the total costs, including opportunity costs.

Total Costs

The comprehensive total of all spending required for the creation of goods or services, covering expenses that are both stationary and those subject to change.

Public Utilities

Entities that provide essential services to the public, such as water, electricity, and natural gas, often under government regulation.

Natural Monopolies

Industries where a single firm can supply the entire market at a lower cost than if there were multiple firms, often due to high fixed costs.