Scenario 22.2 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 22.2, 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

Accounting profit is calculated as total revenue minus explicit costs. The firm earned $350 million in revenue and incurred $320 million in costs, resulting in an accounting profit of $30 million ($350 million - $320 million).