The Principal Difference Between Accounting Profit and Economic Profit Is

question 7

Multiple Choice

The principal difference between accounting profit and economic profit is:

• A)Accounting profit is distorted by the arbitrary treatment of depreciation and unusual items
• B)Accounting profit includes both economic profit and the normal return on capital to the providers of equity capital
• C)Economic profit is cash flow based and is,hence,less subject to manipulation that accounting profit
• D)Economic profit is endorsed by economists who tend to be more rigorous than accountants.

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Definitions:

Control

The power to influence or direct people's behavior or the course of events, or in an experimental context, the standard conditions used for comparison.

Generalized Anxiety Disorder

A mental health disorder characterized by persistent and excessive worry about various aspects of life, beyond what might be considered reasonable.

Placebo Control

A method in research where a group of participants receives a sham or inert treatment to compare against the effects of the actual treatment.

Newly Developed Treatment

Innovative or recently introduced methods or interventions for diagnosing, preventing, or curing diseases.