What Is the Best Explanation for This Journal Entry

question 68

Multiple Choice

What is the best explanation for this journal entry?

• A)Purchased supplies with cash.
• B)Returned supplies previously purchased.
• C)Purchased supplies on account.
• D)Paid accounts payable.

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Definitions:

Implicit Costs

Costs that are not directly paid out or incurred in money but represent the opportunity cost of using resources owned by the firm for its own production instead of renting them out or selling.

Explicit Costs

Direct, out-of-pocket payments made by a business for resources and services used in production.

Incremental Cost

The additional cost associated with producing one more unit of a product or service.

Marginal Cost

The increase or decrease in the total cost of a product when the production volume is increased by one unit.