Explain how the accounting profits or losses of an, Accounting Basics

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Explain how the accounting profits or losses of an

Question: Explain how the accounting profits (or losses) of an unsubsidized public enterprise, the output of which creates positive externalities for other firms, are likely to overstate (understate) the true level of profits (losses) of that firm. Is it possible for a para-state firm which creates positive externalities to private sector enterprises to have an accounting loss but still be "socially profitable"? Explain.

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