Profit computed using explicit costs as the only measure of costs is:Question 16Select one:a.explicit profit.b.accounting profit.c.implicit profit.d.economic profit.
Question
Profit computed using explicit costs as the only measure of costs is:Question 16Select one:a.explicit profit.b.accounting profit.c.implicit profit.d.economic profit.
Solution
The profit computed using explicit costs as the only measure of costs is known as accounting profit. So, the answer is b. accounting profit.
Here's why:
Explicit costs are the direct, out-of-pocket expenses for a firm, such as wages, rent, and materials. These costs are easily identified and planned for, and are typically documented and itemized in the company's accounting records.
Accounting profit is a company's total earnings, calculated according to generally accepted accounting principles (GAAP). It includes the explicit costs of doing business, but does not include implicit costs such as opportunity costs.
Therefore, when a company calculates its profit using only explicit costs, it's calculating its accounting profit.
Similar Questions
Economic profits are calculated by subtracting:Group of answer choicesimplicit costs from total revenue.explicit costs from total revenue.explicit and implicit costs from total revenue.implicit costs from normal profits.
Multiple Choice QuestionWhat type of profit remains after all explicit and implicit costs have been subtracted from total revenue?Multiple choice question.Accounting profitNormal profitResidual profitEconomic profit
Total revenue minus the implicit and explicit costs of production is ________ profit.Multiple choice question.averageaccountingeconomicmarginal
Which of the following expressions is correct?Group of answer choicesaccounting profit = economic profit + implicit costsaccounting profit = total revenue − implicit costseconomic profit = accounting profit + explicit costseconomic profit = total revenue − implicit costs
Total revenue minus the implicit and explicit costs of production is profit.
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