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:

Held For Sale

Refers to assets that a company intends to sell within the next year, often reported separately on financial statements.

Investment In Associate

An investment in another company in which the investor has significant influence but not full control, usually reflected in the ownership of 20% to 50% of the voting stock.

Highly Probable

A term indicating a high chance or likelihood that a specific event or outcome will occur.

Major Advertisements

Significant or impactful promotional messages in various media aimed at a large audience to influence their attitude or behavior towards products, services, or ideas.