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2 October, 17:59

Which of the following statements is true? Multiple Choice

A) Accounting profit is always positive.

B) Economic profit is always positive.

C) Economic profit is greater than or equal to accounting profit.

D) Accounting profit is greater than or equal to economic profit.

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  1. 2 October, 18:23
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    Answer: Option D

    Explanation: Accounting profit is always equals to or greater than the economic profit of an entity. This is due to the fact that, while computing accounting profit the accountant do no take implicit cost into consideration.

    Whereas, economic profit is the amount of profit remaining after deducting both explicit and implicit cost.

    Implicit cost refers to the cost of loosing profits by choosing one alternative over other.
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Home » Business » Which of the following statements is true? Multiple Choice A) Accounting profit is always positive. B) Economic profit is always positive. C) Economic profit is greater than or equal to accounting profit.
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