The Basic Function of Profits and Losses Is to Allocate

question 174

True/False

The basic function of profits and losses is to allocate society's scarce resources to their highest valued uses.

---

Definitions:

Straight-Line Depreciation

A technique for determining an asset's depreciation, presuming that the asset will depreciate by a consistent value annually throughout its projected useful life.

Incremental Sales

The additional revenue generated from a particular business action or decision, beyond existing sales.

Straight-Line Depreciation

A process for dividing the cost of an asset equally over the duration of its usability.

After-Tax Discount Rate

This rate is used to discount future cash flows to their present value, considering the effect of taxes.