A Firm's Profit Is

question 6

Multiple Choice

A firm's profit is

• A)greater if it is a corporation rather than if it is a sole proprietorship
• B)higher if it raises its price than if it does not
• C)lower if it lowers its price than if it does not
• D)never taxed by the government
• E)its revenue minus its costs

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Definitions:

Net Income

The net income of a business following the deduction of all expenditures and taxes from its total revenue.

Owners' Equity

The residual interest in the assets of a company after deducting liabilities, representing what the owners own outright.

Investment

The process of distributing funds with the goal of earning revenue or gains.

Acid Test Ratio

A financial metric that measures a company's ability to pay off its short-term liabilities with its quick assets.