Pete owns a shoe-shine business. His accountant most likely includes which of the following costs on his financial statements? (i)
Shoe polish
(ii)
Rent on the shoe stand
(iii)
Wages Pete could earn delivering newspapers
(iv)
Interest that Pete's money was earning before he spent his savings to set up the shoe-shine business
A)(i) only
B)(i) and (ii) only
C)(iii) and (iv) only
D)(i), (ii), (iii), and (iv)

Question

Quizplus · Accepted Answer

The costs that are most likely included on Pete's financial statements are the costs directly related to the operation of the shoe-shine business, which are (i) shoe polish and (ii) rent on the shoe stand. Costs that are not directly related to the operation of the business such as (iii) wages Pete could earn delivering newspapers and (iv) interest that Pete's money was earning before he spent his savings to set up the shoe-shine business are not likely included on the financial statements. Therefore, the best choice is (i) and (ii) only.

Pete Owns a Shoe-Shine Business