Figure 11-1 ​

question 45

Multiple Choice

Figure 11-1
​

-Refer to Figure 11-1. For which two boxes is it the case that externalities arise because something of value has no price attached to it?

• A)Box A and Box B
• B)Box A and Box C
• C)Box B and Box D
• D)Box C and Box D

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Definitions:

Net Income

The remaining earnings of a company following the deduction of all expenses and taxes from its total revenues.

Net Sales

This represents the amount of sales generated by a company after deductions for returns, allowances for damaged or missing goods, and discounts.

Prepaid Expenses

Payments made in advance for goods or services, which are recognized as expenses over time as the benefits are received.

Adjusting Entries

Financial records generated at the end of a bookkeeping period to allocate receipts and disbursements to the time in which they actually occurred.