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

Question

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

Quizplus · Accepted Answer

The accountant would include the cost of the shoe polish and the rent on the shoe stand as these are direct expenses related to the operation of the shoe-shine business. The wages Pete could earn delivering newspapers and the interest he could have earned on his savings are not relevant costs for the financial statements of the shoe-shine business.

Pete Owns a Shoe-Shine Business