The Economic Theory of Business Behavior Assumes That the Goal

question 41

Multiple Choice

The economic theory of business behavior assumes that the goal of a firm is to:

• A)earn an accounting profit.
• B)earn an economic profit.
• C)earn maximum revenue.
• D)maximize its profit.

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Definitions:

Net Sales

The amount of sales revenue remaining after deducting returns, allowances for damaged or missing goods, and discounts.

Average Total Assets

The average value of all assets owned by a company over a period, typically calculated by combining the beginning and ending values for a period and dividing by two.

Asset Turnover

A ratio that determines the competence of an organization in using its assets to generate income from sales.

Book Value

The net value of a company's assets minus its liabilities, often used to assess its equity value.