Joanne left her last job, in which she was earning $50,000, in order to form her own consulting business. Her revenues for the first year of consulting were $210,000. During that year, she hired two assistants for $25,000 each and spent $25,000 on office equipment. In addition, she incurred $75,000 in miscellaneous expenses. Her accounting profit that first year was

Question

Quizplus · Accepted Answer

Joanne's accounting profit can be calculated as: 
Revenues - (Salaries of assistants + Office equipment expenses + Miscellaneous expenses) - Previous salary
= $210,000 - ($25,000 + $25,000 + $75,000) - $50,000 
= $35,000 
Therefore, Joanne's accounting profit for the first year of consulting was $35,000 or choice (B).

Joanne Left Her Last Job, in Which She Was Earning