When a Firm Has an Accounting Profit That Is Negative

question 421

Multiple Choice

When a firm has an accounting profit that is negative, it

• A) will never produce output, even in the short run.
• B) may still have economic profit.
• C) has total revenue that is less than total cost.
• D) cannot be producing where price equals marginal cost.

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Definitions:

Account Type

Refers to classifications made for various financial transactions in accounting, such as assets, liabilities, equity, revenue, and expenses.

Debit And Credit Effects

The accounting actions that increase or decrease accounts in the double-entry bookkeeping system, where debits are entries on the left side and credits are entries on the right.

Normal Account Balance

The usual or expected balance that an account possesses, which can be a debit for assets and expenses, or a credit for liabilities, equity, and revenue.

Journal Entries

These are records that note the details of financial transactions in accounting, following the double-entry bookkeeping system.