Income Forgone from Not Using an Asset in Its Best

question 60

Multiple Choice

Income forgone from not using an asset in its best economic alternative is an example of which of the following type of cost?

• A)outlay cost.
• B)direct cost.
• C)indirect cost.
• D)opportunity cost.

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Definitions:

Net Income

The total earnings of a company after subtracting all expenses and taxes from total revenue; often referred to as the bottom line.

Revenue and Expense Account Balances

The amounts recorded in accounts tracking the income earned and expenses incurred by a business over a period of time.

Owner's Capital Account

An equity account on the balance sheet representing the owner's investment and retained earnings in the business.

Trial Balance

A bookkeeping report that lists the balances of all ledgers in two columns, debit and credit, ensuring that the total debits equal total credits, which is crucial for the accuracy of financial statements.