Situation 21-4
Joe is the owner-operator of Joe's Haircuts Unlimited. Last year he earned $200,000 in total revenues and paid $125,000 to his employees and suppliers. During the course of the year, he received three offers to work for other barbers, with the highest offer being $50,000 per year.Refer to Situation 21-4. What are Joe's accounting profits?

Question

Situation 21-4
Joe is the owner-operator of Joe's Haircuts Unlimited. Last year he earned $200,000 in total revenues and paid $125,000 to his employees and suppliers. During the course of the year, he received three offers to work for other barbers, with the highest offer being $50,000 per year.Refer to Situation 21-4.  What are Joe's accounting profits?

Quizplus · Accepted Answer

Joe's accounting profits are calculated as total revenues minus explicit costs. His total revenues are $200,000, and he paid $125,000 to employees and suppliers. Therefore, his accounting profit is $200,000 - $125,000 = $75,000.

Situation 21-4 Joe Is the Owner-Operator of Joe's Haircuts Unlimited. Last Year