if a firm is earning negative accounting profits, it implies a. that the firm’s economic profits are necessarily positive b. that the firm’s economic profits are necessarily negative c. that the firm’s economic profits are necessarily zero d. accounting profits alone cannot determine economic profits

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07-09-2022
Business

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if a firm is earning negative accounting profits, it implies a. that the firm’s economic profits are necessarily positive b. that the firm’s economic profits are necessarily negative c. that the firm’s economic profits are necessarily zero d. accounting profits alone cannot determine economic profits

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vipinkumar69547 vipinkumar69547 · Answer 1 · 2022-09-10T05:43:57-04:00

If a firm is earning negative accounting profits, it implies more information is needed to conclude about accounting profits.

Accounting profit is a company's net income or revenue fewer expenses. By deducting entire costs from the overall revenue or return of a business or investment, you may calculate economic profit. Businesses disclose their accounting gains to investors on their income statements as well as to the IRS for tax reporting purposes.

Because it contains all required reporting of both revenues and expenses, accounting profit is one of the main sources of information used by investors. As a result, it comprises the full cost of goods sold as well as all marketing, general and administrative, finance, and realized gain and loss costs.

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