Which of the Following Is the Formula Used for Computing

question 101

Multiple Choice

Which of the following is the formula used for computing economic profits?

• A) economic profits = total revenue - implicit costs
• B) economic profits = total revenue - (implicit costs + explicit costs)
• C) economic profits = total costs - total revenue
• D) economic profits = total revenue - explicit costs

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Definitions:

Allowance for Doubtful Accounts

A contra asset account used to estimate the portion of a company's accounts receivable that may not be collectible.

Uncollectible Receivables

Amounts owed to a company from customers that are considered unlikely to be collected.

Credit Balance

The amount appearing on the credit side of an account, indicating the total credits exceed the total debits.

Formal Written Instrument

A legally binding document or contract clearly outlining the terms and conditions agreed upon by the parties involved.