Excess income over and above the expected amount of after-tax operating income is called:

Question

Quizplus · Accepted Answer

Excess income over and above the expected amount of after-tax operating income is called economic profit. It includes both explicit costs (such as rent, wages, and materials) and implicit costs (such as the opportunity cost of the owner's time and capital). Economic profit is an important measure of a company's long-term viability as it indicates whether the company is earning a return on all of its resources, including those that are not immediately visible on a balance sheet. Choice A (Extraordinary profit) is not a widely used term in economics, and choice B (Remaining profit) does not accurately describe the concept of excess income. Choice D (Monetary profit) is too narrow a term as profit can be measured in a variety of ways beyond just monetary.

Excess Income Over and Above the Expected Amount of After-Tax