Robert withdrew $100,000 from an account that paid 10 percent annual interest and used the funds to purchase real estate. After one year he sold the property for $120,000. The accounting profit on this deal was:
A) $120,000.
B) $100,000.
C) $20,000.
D) $10,000.

Question

Quizplus · Accepted Answer

The accounting profit is calculated as the selling price minus the initial investment. Robert sold the property for $120,000 and initially invested $100,000, so the accounting profit is $120,000 - $100,000 = $20,000.

Robert Withdrew $100,000 from an Account That Paid 10 Percent