Which of the following items is an implicit transaction?
Recognizing a gain on the sale of equipment
Recording payment of monthly interest on loan
Recognizing impairment on an intangible asset
Recognizing deferred revenue through delivery of goods
Solution: Which of the following items is an implicit transaction?
Correct Option is : Recording payment of monthly interest on loan
Explanation: Implicit transaction represents an opportunity cost that arises when a company uses internal resources toward a project without any explicit compensation for the utilization of resources. This means when a company allocates its resources, it always forgoes the ability to earn money off the use of the resources elsewhere, so there's no exchange of cash.
The opportunity cost for the business is the monthly interest payments on the loan. If the businesses would have started, there would have been a saving in the interest cost of the loan.
Which of the following items is an implicit transaction? Recognizing a gain on the sale of equipment Recording payment o...
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