The Larger the Implicit Costs of a Business

question 89

Multiple Choice

The larger the implicit costs of a business:

• A) the greater accounting profit will be.
• B) the smaller economic profit will be.
• C) the more likely it will be a successful venture.
• D) the smaller the explicit costs will be.

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Definitions:

Bonds Payable

Long-term liabilities representing money owed by a company to bondholders, to be repaid at a future date.

Financing Activities

Transactions that result in changes in the size and composition of the equity capital or borrowings of a company.

Dividends Paid

The portion of a company's earnings distributed to its shareholders typically on a regular basis.

Operating Activities

These activities generate cash inflows and outflows related to revenue and expense transactions that affect net income.