Suppose That for a Particular Business There Are No Implicit

question 242

Multiple Choice

Suppose that for a particular business there are no implicit costs. Then

• A)accounting profit will be greater than economic profit.
• B)accounting profit will be the same as economic profit.
• C)accounting profit will be less than economic profit.
• D)the relationship between accounting profit and economic profit cannot be determined without more information.

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Definitions:

Payments for Income Tax

Financial outlays made by individuals or corporations to government entities in accordance with taxable income or profits.

Unearned Rental Revenue

Income received from tenant payments before the rental period has occurred, recorded as a liability until earned through the passage of time.

Rent Revenue

Income generated from leasing out property or equipment to another party.

Direct Method

A way of presenting a cash flow statement where actual cash flows from operating activities are disclosed directly.