When There Is an Excess of Expected Net Income Over

question 15

Multiple Choice

When there is an excess of expected net income over the cost of capital

• A)abnormal net income is positive.
• B)accounting profits are negative.
• C)abnormal net income is negative.
• D)economic profits minus abnormal net income is negative.

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Definitions:

Prepaid Expense

Expenditures paid for in advance and recorded as assets before they are used or consumed.

Asset

An economic resource owned or controlled by an individual or entity, expected to provide future benefits.

Debit

An entry recorded on the left side of an account ledger, representing an increase in assets or expenses or a decrease in liabilities, equity, or income.

Snow Removal

Services or actions taken to clear snow from roads, sidewalks, and other surfaces, typically considered a maintenance expense for businesses in areas with snowfall.