Which of the following is an implicit cost of owning a business? (i) forgone savings account interest when personal money is invested in the business
(ii) interest expense on existing business loans
(iii) damaged or lost inventory

Question

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The forgone savings account interest is an implicit cost because the owner could have earned interest on that money if it had been kept in a savings account or other investment. The interest expense on existing business loans and damaged or lost inventory are explicit costs, meaning they are actual out-of-pocket expenses that can be easily tracked and measured.

Which of the Following Is an Implicit Cost of Owning