In Order to Determine Why Net Income and Cash on the Balance

question 93

Multiple Choice

In order to determine why net income and cash on the balance sheet do not equal, an accountant can prepare a(n) :

• A) income statement.
• B) statement of retained earnings.
• C) balance sheet.
• D) cash flow statement.
• E) statement of owner's equity.

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Definitions:

Direct Costs

Expenses that can be directly traced to the production of a specific good or service, such as materials and labor.

Economic Profit

The difference between a firm's total revenue and its total costs, including both explicit and implicit costs, measuring the firm's overall financial performance.

Entrepreneurial Alertness

An entrepreneur's ability to notice and take advantage of new business opportunities not seen by others.

Barriers Entry

Obstacles companies must overcome to enter a particular market, which may include high startup costs, regulation, or strong competition.