When Economic Profits Are Negative, Accounting Profits

question 83

Multiple Choice

When economic profits are negative, accounting profits

• A) must be positive.
• B) will be negative.
• C) will equal zero.
• D) could be positive, negative or zero.

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Definitions:

Premium Account

An upgraded account or service that a customer opts for, typically providing additional features or benefits for an extra cost.

Discount Account

An account that represents the difference between a bond's face value and its selling price when it is sold at less than its face value.

Debt to Assets Ratio

A financial ratio that measures the percentage of a company's assets financed by creditors through debt, indicating the degree of financial leverage.

Total Debt

The sum of all liabilities, both current and long-term, that a company owes.