Which of the following statements is correct?
A)Economic profit takes into account all costs involved in producing a product.
B)Accounting profit is not relevant in preparing the firm's financial statement.
C)Economic profit always exceeds accounting profit.
D)Accounting profit is the same as economic profit.

Question

Quizplus · Accepted Answer

Economic profit takes into account all costs involved in producing a product, including implicit costs such as opportunity costs. Accounting profit only considers explicit costs and is not relevant in preparing the firm's financial statement. Economic profit may or may not exceed accounting profit depending on the size of implicit costs. Therefore, D is incorrect.

Which of the Following Statements Is Correct