Question

9. John owns a shoe-shine business. His accountant most likely includes which of the following costs on his financial statements? a. wages John could earn washing windows b. dividends John's money was earning in the stock market before John sold his stock and bought a shoe-shine booth c. the cost of shoe polish d. Both b and c are correct.

Answer 1

9) Accounting cost are the explicit cost which are out of pocket expense.

Option A and B are opportunity cost stating the earning which John could have earned if John did not opened a show polish booth.

Option C is correct which is the cost out of his pocket to run his business.

Thus option C is correct.

7) Implicit cost is calculated as opportunity cost which is not an out of pocket expense.

Foregone investment opportunities is an implicit cost.

Wages of workers and raw material cost is an explicit cost and is a out of pocket expense.

Thus option A is correct.