Scenario 8.2
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 8.2,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

Scenario 8.2
 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 8.2,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

Quizplus · Accepted Answer

The accounting profit is calculated as total revenue minus explicit costs. Here, the revenue is $350 million and the explicit costs (land, labor, and debt) are $320 million. Therefore, the accounting profit is $350 million - $320 million = $30 million.

Scenario 8.2 Consider a Publicly Held Firm (One Whose Stock Shares