From Society's Point of View, the Economic Function of Profits

question 35

Multiple Choice

From society's point of view, the economic function of profits and losses is to

• A)promote the equal distribution of real assets and wealth.
• B)achieve full employment and price level stability.
• C)contribute to a more equal distribution of income.
• D)reallocate resources from less-desired to more-desired uses.

---

Definitions:

Income Statement

A financial statement that shows a company's revenues and expenses over a specified period of time, leading to net income or net loss.

GAAP

Generally Accepted Accounting Principles; a set of accounting standards, principles, and procedures that companies must follow when compiling their financial statements in the U.S.

Convertible Bonds

Bonds that can be converted into a predetermined number of a company’s shares at certain times during their life, usually at the discretion of the bondholder.

Diluted Earnings Per Share

A metric that calculates the quality of earnings per share (EPS) if all convertible securities were converted into common stock, indicating the potential dilution that could occur.