Compound Entries

question 115

Multiple Choice

Compound entries

• A) would include an entry to record the purchase of a computer for cash.
• B) include at least two debits or two credits.
• C) require that all credits be listed before the debits for entries affecting the statement of financial position.
• D) should be broken into their component parts and recorded as simple entries.

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Definitions:

Economic Profits

The margin between total earnings and all incurred costs, accounting for both obvious and concealed expenses.

Accounting Profits

Net income reported on a company's financial statements, calculated as total revenues minus explicit costs, excluding opportunity costs.

Economic Profits

The surplus remaining after total costs are subtracted from total revenues, taking into account both explicit and implicit costs.

Accounting Profits

The difference between total revenue and explicit costs; the net income a firm reports on its income statement.