You Have Paid All Expenses to Travel to Your Favorite

question 98

Multiple Choice

You have paid all expenses to travel to your favorite beach for a vacation.You made these payments early in order to receive a discount and all payments are nonrefundable.Unfortunately,a hurricane is likely to crash into the coast during your vacation dates.What should not be considered as you make a decision to take your trip or not?

• A) The money that has already been spent on the trip
• B) The satisfaction you are likely to receive at the beach during a hurricane
• C) The best alternative use of your time if you do not take the trip
• D) The additional costs you didn't anticipate while on the trip.

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Definitions:

Cash Basis

An accounting method where revenues and expenses are recognized only when cash is exchanged, as opposed to when they are incurred.

Permanent Account

An account that is not closed at the end of the accounting period and its balances are carried forward into the next period.

Temporary Account

An account used in accounting that is closed at the end of each accounting period, transferring its balance to a permanent account.

Cash Sales

Transactions where payment for goods or services is made at the time of sale in cash or equivalent forms.