James used $200,000 from his savings account that paid an annual interest of 10% to purchase a hardware store.After one year,James sold the business for 300,000.His accounting profit is:

Question

​James used $200,000 from his savings account that paid an annual interest of 10% to purchase a hardware store.After one year,James sold the business for 300,000.His accounting profit is:

Quizplus · Accepted Answer

The accounting profit is calculated as the difference between the revenue and the total expenses. In this case, James only incurred the initial expense of $200,000 to purchase the hardware store.

After one year, he sold the business for $300,000, which means his revenue was $300,000. Therefore, his accounting profit would be:

Accounting Profit = Revenue - Expenses
Accounting Profit = $300,000 - $200,000
Accounting Profit = $100,000

Therefore, the best choice is B, with an accounting profit of $100,000.

​James Used $200,000 from His Savings Account That Paid an Annual

James Used $200,000 from His Savings Account That Paid an Annual