If Economic Profit Is Equal to Zero, Then

question 4

Multiple Choice

If economic profit is equal to zero, then

• A) the entrepreneur is earning only a normal profit.
• B) the entrepreneur's profit cannot be determined based on the information given.
• C) the entrepreneur's profit as measured by accountants is also equal to zero.
• D) the entrepreneur's profit as measured by accountants must be less than zero.

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Definitions:

Customer Billing

The process of invoicing customers for goods or services provided, detailing the amount owed and payment terms.

Installment Sales Method

An accounting technique that recognizes revenue and expenses from a sale when payments are actually received, rather than at the point of sale.

Realized Gross Profit

The difference between the cost of goods sold and the sales revenue received, specifically referring to profit that has been recognized once a transaction is completed.

Initial Franchise Fees

The upfront cost paid by a franchisee to a franchisor to enter into a franchise agreement, typically covering training, support, and the right to use trademarks.