Which of the Following Best Illustrates the Elimination Principle

question 112

Multiple Choice

Which of the following best illustrates the elimination principle?

• A) Unproductive workers are fired and replaced by more productive workers.
• B) A firm earning below-normal profits continues to operate in the hopes of earning higher profits in the future.
• C) Above-normal profits are reduced as new firms enter the market.
• D) High demand causes a shortage of goods in the market.

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Definitions:

Freight In

The cost associated with transporting goods from the supplier to the buyer, which is often added to the purchase cost of inventory.

Income From Operations

The profit generated from a company's regular business activities, excluding deductions of interest and taxes.

Multiple-Step Income Statements

A detailed financial statement that separates operating revenues and expenses from non-operating ones to calculate net income in several steps.

Gross Profit

The difference between sales revenue and the cost of goods sold before accounting for other expenses.