Refer to Scenario 7.2 below to answer the question(s) that follow.
SCENARIO 7.2: You are the owner and only employee of a company that sets odds for sporting events. Last year you earned a total revenue of $100,000. Your costs for rent and supplies were $50,000. To start this business you invested an amount of your own capital that could pay you a return of $20,000 a year.
-Refer to Scenario 7.2. Your accounting profit last year was
A) $10,000.
B) $30,000.
C) $50,000.
D) $60,000.

Question

Quizplus · Accepted Answer

Accounting profit is calculated by subtracting the explicit costs from the total revenue. In this scenario, the explicit costs are $50,000 (costs for rent and supplies), and the total revenue is $100,000. Therefore, the accounting profit is $100,000 - $50,000 = $50,000.