Which of the Following Statements Regarding Accounting and Economic Profits

question 371

Multiple Choice

Which of the following statements regarding accounting and economic profits is FALSE?

• A) Economic profits can be zero even if accounting profits are positive.
• B) Economic profits = total revenue - (explicit + implicit costs)
• C) Accounting profits can be negative if economic profits are positive.
• D) Accounting profits = total revenue - explicit costs

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Definitions:

Acceptance Sampling Plan

A statistical quality control method that determines the number of units from a batch to inspect to decide if the entire batch should be accepted or rejected.

AQL

Acceptable Quality Level is a statistical measurement of the maximum number of defective items considered acceptable in a sample size during quality control testing.

LTPD

Lot Tolerance Percent Defective, a quality control measure indicating the highest defect rate in a lot that consumers are willing to tolerate.