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elena55 [62]
3 years ago
6

Suppose a local hardware store has explicit costs of $2 million per year and implicit costs of $44,000 per year. If the store ea

rned an economic profit of $50,000 last year, this means that the store's accounting profit equaled:________.a. 6000b. 94000c. 2.044 milliond. 2.05 million
Business
1 answer:
xeze [42]3 years ago
5 0

<u>Answer: </u>Option B$94000

<u>Explanation:</u>

The economic profit of the company can be found from the difference of the total revenue and the total cost that includes implicit and explicit cost. To find the total revenue earned the economic profit formula can be used.

Economic profit = Total revenue - (Explicit cost+ Implicit cost)

50000=Total revenue - (2,000,000+44,000)

Total Revenue = 2,044,000+50000

=2,094,000

Accounting profit is the actual profits earned by the firm which is calculated as difference between revenue and explicit cost. Implicit cost are not paid for they are the hidden costs.

Accounting profits = Total revenue - Explicit cost

=2,094,000 - 2,000,000

=$94,000

Thus the accounting profit of the local hardware store is $94,000.

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Explanation:

Suppose that an economy has the per-worker production function given as follows:

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Answer:

d. a prior period adjustment.

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Correction of the error when discovered in the next year should be treated as a prior period adjustment. This is basically because the error was already recorded in the past financial report. Since these reports are final and cannot be changed, then the correction to this error needs to be implemented in the next year's financial report and would reflect on that year's income taxes. The process of doing this is known in accounting as a prior period adjustment

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