Asked by
Justin Wexler
on Oct 08, 2024
Verified
The following is cost information for the Creamy Crisp Donut Company: Entrepreneur's potential earnings as a salaried worker = $50,000
Annual lease on building = $22,000
Annual revenue from operations = $380,000
Payments to workers = $120,000
Utilities (electricity,water,disposal) costs = $8,000
Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000
Entrepreneur's forgone interest on personal funds used to finance the business = $6,000
Refer to the data.Creamy Crisp's accounting profit is:
A) $150,000.
B) $380,000.
C) $230,000.
D) $294,000.
Accounting Profit
The total revenue of a firm less its explicit costs; the profit (or net income) that appears on accounting statements and that is reported to the government for tax purposes.
Entrepreneur's Talent
Entrepreneur's talent refers to the unique skills, insights, and abilities that an entrepreneur applies to develop innovative ideas, overcome obstacles, and drive business success.
Annual Revenue
The total amount of money generated by a company from its activities, such as sales or services, before any expenses are subtracted, in one fiscal year.
- Calculate and distinguish between accounting profit and economic profit.
- Recognize explicit costs and their impact on a firm's financial statements.
Verified Answer
MT
Learning Objectives
- Calculate and distinguish between accounting profit and economic profit.
- Recognize explicit costs and their impact on a firm's financial statements.