Profit is:
A) An ideal measure of the 'well-offness' of a firm because income and expenses are clearly defined.
B) Only a measure of financial performance and therefore not useful in decision-making.
C) Directly affected by the accounting policy choices implemented by management.
D) Comparable across all firms as it is simply calculated by subtracting expense from revenues.
E) None of the given answers.

Question

Quizplus · Accepted Answer

Profit can be directly affected by the accounting policy choices implemented by management, such as choosing different methods of depreciation or inventory valuation. This can impact the reported profit of the firm and make it difficult to compare profits across different companies. Therefore, profit is not a completely reliable or comparable measure of a firm's financial performance.

Profit Is