Which one of the following represents an economic,but not an accounting,cost of owning a restaurant?
A)The interest foregone by the owner on the personal savings invested in the restaurant
B)The labor hired used to operate the restaurant
C)The linens used to cover tables
D)The ingredients used to prepare the meals

Question

Quizplus · Accepted Answer

The interest foregone on the personal savings invested in the restaurant represents an economic cost because it reflects the opportunity cost of the capital invested in the restaurant, which could have earned interest if it was invested elsewhere. However, it is not an accounting cost because it is not a direct out-of-pocket expense incurred by the business. B, C, and D are all accounting costs because they involve direct payments for labor, supplies, and ingredients, respectively.

Which One of the Following Represents an Economic,but Not an Accounting,cost