Income that is measured after the adjustment for the cost of capital is called:
A) operating income.
B) operating profit.
C) accounting income.
D)economic profit.

Question

Quizplus · Accepted Answer

Economic profit is the income that is measured after deducting the cost of capital. It takes into account not only the explicit costs of doing business (like salaries and supplies) but also the opportunity cost of the capital invested in the business. This measure gives a more accurate picture of the profitability of a business than accounting income or operating income/profit, which do not consider the cost of capital.

Income That Is Measured After the Adjustment for the Cost