How Do Firms Measure Their Profit

question 149

Multiple Choice

How do firms measure their profit?

• A) by the sum of total sales revenue
• B) by the total value of outstanding shares of stock
• C) by subtracting total costs from total revenues
• D) by subtracting total revenues from total costs

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Definitions:

Book Value

The net value of a company's assets found on its balance sheet, often compared to its market value.

Extraordinary Item

An unusual and infrequent gain or loss that is reported separately in a company's financial statements to give a clearer picture of its regular income.

Operating Assets

Assets that are used by a business in its daily or regular operations to generate revenue, including cash, inventory, and property, plant, and equipment.

Nonmonetary Asset

Assets that are not convertible directly into a fixed amount of money and do not have a stated monetary value, such as property, equipment, and intellectual property.