The following are the two statements regarding concept of profit. Indicate the correct code of the statements being correct or incorrect.
Statement (I) : Accounting profit is a surplus of total revenue over and above all paid-out costs, including both manufacturing and overhead expenses.
Statement (II) : Economic or pure profit is a residual left after all contractual costs have been met, including the transfer costs of management, insurable risks, depreciation and payments to shareholders sufficient to maintain investment at its current level.
1
Both the statements are correct.
2
Both the statements are incorrect.
3
Statement (I) is correct while Statement (II) is incorrect.
4
Statement (I) is incorrect while Statement (II) is correct.