Which of the Following Statements Is FALSE

question 400

Multiple Choice

Which of the following statements is FALSE?

• A) A correct measure of a firm's economic cost includes both accounting and opportunity cost.
• B) The accounting profit earned by a firm will always be less than its economic profit.
• C) The major difference between accounting and economic profit is that accounting profit does not reflect the opportunity cost of using resources.
• D) The accounting profit of a firm is its total revenue minus total explicit costs.

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Definitions:

Noncash Consideration

Payment made in a form other than cash, such as property, goods, or services, during transactions.

Dividends Payable

Refers to the amount of dividends that a company has declared to pay out to its shareholders but has not yet distributed.

Dividends Declared

The portion of a company's earnings that is approved by the board of directors to be distributed to shareholders.

Retained Earnings

The portion of net income that is not distributed to shareholders and is instead reinvested in the business.