Which of the Following Costs Related to the Purchase of Production

question 47

Multiple Choice

Which of the following costs related to the purchase of production equipment incurred by Lincoln Company during 2011 would be considered a revenue expenditure?

• A)Installation costs for equipment
• B)Purchase price of the equipment less the cash discount
• C)Repair and maintenance costs during the equipment's first year of service
• D)Transportation charges to deliver the equipment to Lincoln Company

---

Definitions:

Consumer Surplus

The difference between the total amount that consumers are willing and able to pay for a good or service and the total amount that they actually do pay.

Financial Viability

The ability of an entity or project to manage its expenses and generate sufficient revenue to continue operating effectively.

Residential Neighborhoods

Areas primarily containing housing where people live, often differentiated by types of housing, socioeconomic status, and urban planning.

Externalities

Negative or positive impacts on third parties stemming from business operations, which are not accounted for in the pricing of products or services.