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:

IFRS

International Financial Reporting Standards, a set of accounting standards that provide guidelines for financial reporting, aiming to make company accounts understandable and comparable across international boundaries.

GAAP

In any particular legal area, the Generally Accepted Accounting Principles are the recognized standard of guidelines for conducting financial accounting.

Probable

Probable refers to the likelihood that a future event will occur, often used in accounting to determine if a contingent event should be recorded.

Warranty Obligations

Warranty obligations are promises made by a seller to a buyer to repair, replace, or rectify defects in goods sold within a certain period after the sale.