Question

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

Correct option is (c)

Step-by-step explanation:

An accountant will record only those cost in the financial statements that have incurred on account of carrying out the business.

In this case, option (a) and (b) are opportunity cost of carrying out shoe shine business. These are the income that John could have earned if he did not start shoe-shine business.

Cost of shoe polish is an operating expense incurred to run his shoe-shine business. So this cost will be included by the accountant in the financial statements.