A Business Produces Eight Items and Sells Them for $25

question 152

Multiple Choice

A business produces eight items and sells them for $25 each. The total cost of producing the items is $190 for explicit costs and $200 for implicit costs. Accounting profit is:

• A) −$190.
• B) $10.
• C) $20.
• D) $200.

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Definitions:

Net Assets

The total assets of a company minus its total liabilities, representing the shareholders' equity in the company.

Deferral Method

An accounting practice where revenue or expenses are recognized at a later date than when they were initially incurred, aligning income with the periods in which the related cash flow occurs.

Financial Statements

Documents that report the financial activities and conditions of a business or entity, including the balance sheet, income statement, and cash flow statement.

Net Assets

The total assets of a company minus its total liabilities, representing shareholders' equity or owner's equity.