Scenario 9.2
Consider a publicly held firm (one whose stock shares are traded on the stock exchange) that earned revenue worth $350 million and incurred land, labor, and debt costs worth $320 million. The stockholders who have invested a total of $100 million in this firm could have earned 10 percent return on other comparable investments.
-According to the information in Scenario 9.2, how much accounting profit did the firm make last year?
A)$112 million
B)$30 million
C)$20 million
D)-$20 million
E)$2 million

Question

Quizplus · Accepted Answer

The accounting profit is calculated by subtracting the total costs from the total revenue. In this case, the firm's revenue is $350 million and its costs are $320 million, so the accounting profit is $350 million - $320 million = $30 million.

Scenario 9.2 Consider a Publicly Held Firm (One Whose Stock Shares Are