Businesses That Fail to Account for Implicit Costs,like the Strawberry

question 38

Multiple Choice

Businesses that fail to account for implicit costs,like the strawberry farmer,Hiroshi Fujishige,who failed to consider the enormous opportunity of selling his property to Disneyland,will

• A)Go out of business immediately.
• B)Make higher-than-normal profits.
• C)Make more money when they shut down.
• D)Have to increase revenues in order to stay in business.

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Definitions:

Common Shares

Equity securities that represent ownership in a corporation, providing voting rights and entitling the holder to a share of the company’s success through dividends and/or capital appreciation.

Unamortized Premium

The portion of a bond premium that has not yet been amortized or gradually written off against earnings over the bond's life.

Wholly Owned Subsidiary

A company whose entire share capital is owned by another company, making it fully controlled by the parent company.

Statement of Comprehensive Income

A financial statement that includes all changes in equity during a period, except those resulting from investments by owners and distributions to owners, encompassing both net income and other comprehensive income.