Imagine Tom's annual salary as an assistant store manager is $30,000,he owns a building that rents for $10,000 yearly,and his financial assets generate $1,000 per year in interest.One day,after deciding to be his own boss,he quits his job,evicts his tenants,and uses his financial assets to establish a bicycle repair shop.To run the business,he outlays $15,000 in cash to cover all the costs involved with running the business,and earns revenues of $50,000.What are Tom's accounting profits?

Question

Quizplus · Accepted Answer

Accounting profit is calculated as total revenues minus explicit costs. Tom's revenues are $50,000, and his explicit costs are $15,000. Therefore, his accounting profit is $50,000 - $15,000 = $35,000.

Imagine Tom's Annual Salary as an Assistant Store Manager Is