Which of the Following Would Explain Why Accounting Profit Might

question 53

Multiple Choice

Which of the following would explain why accounting profit might be greater than economic profit?

• A)A firm has implicit costs as well as explicit costs.
• B)A firm has only explicit costs.
• C)A firm's net income is greater than its accounting profit.
• D)A firm's net income is less than its accounting profit.

---

Definitions:

Payroll Tax Expense

Levies placed on both employers and employees, determined based on a percentage of the wages that employers distribute to their workforce.

FICA Taxes Payable

Taxes owed for Federal Insurance Contributions Act, primarily for Social Security and Medicare, withheld from employees' paychecks.

Employer's Payroll Taxes

These are taxes that employers are required to pay on behalf of their employees, including Social Security and Medicare taxes in the United States.

Pension Rights

The entitlements employees earn towards future pension benefits as a result of their employment.