Refer to Scenario 7.6 below to answer the question(s) that follow.
SCENARIO 7.6: Upon graduating with an accounting degree, you open your own accounting firm of which you and your assistant are the only employees. To start the firm you passed on a job offer with a large accounting firm that offered you a salary of $50,000 annually. Last year you earned a total revenue of $120,000. Rent and supplies last year were $50,000. Your assistant's salary is $30,000 annually.
-Refer to Scenario 7.6. Your annual operating profit is
A) -$10,000.
B) $40,000.
C) $70,000.
D) $80,000.

Question

Quizplus · Accepted Answer

Operating profit is calculated by subtracting the operating expenses from the total revenue. In this scenario, the total revenue is $120,000, and the operating expenses include rent and supplies ($50,000) and the assistant's salary ($30,000), totaling $80,000. Subtracting $80,000 from $120,000 gives an operating profit of $40,000.