Comparing Two Companies in the Same Industry Should Cause No

question 60

True/False

Comparing two companies in the same industry should cause no problem since both companies are required to use the same accounting principles.

---

Definitions:

Accounting Profits

The net earnings of a company as calculated by subtracting all explicit costs from total revenues, according to standard accounting practices.

Fixed Costs

Costs that do not vary with the level of output or production, such as rent or salaries.

ATC

Average total cost is found by dividing the overall production cost by the number of units produced.

Marginal Revenue

The additional income generated from the sale of one more unit of a product or service.