Which of the Following Statements Is True

question 21

Multiple Choice

Which of the following statements is true?

• A)Normal profits = economic profit
• B)Normal profits = zero economic profits
• C)Economic profit = accounting profit
• D)Economic profit < normal profit

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Definitions:

Finished Goods

Finished Goods are products that have completed all stages of production and are ready for sale to customers.

FIFO Process Cost Method

An accounting method for valuing inventory and the cost of goods sold based on the assumption that the earliest goods purchased or manufactured are sold first.

Equivalent Units

A method used in process costing that converts partially completed units into a number of fully completed units.

Direct Materials Costs

The cost of raw materials that are directly used in the manufacture of a product.