What is an advantage of using a comparsion method of assesment ?

Suppose Ernie gives up his job as financial advisor for P.E.T.S., at which he earned $30,000 per year, to open up a store sellin

8_murik_8 [283]

a) Ernie's accounting profit is <u>$40,500</u>.

b) Ernies economic profit is <u>$10,500</u>, excluding the salary forgone (opportunity cost) from the accounting profit.

<h3>What is the difference between accounting profit and economic profit?</h3>

The difference between accounting profit and economic profit is that accounting profit does not consider the opportunity costs, which economic profit factors in.

Accounting profit is narrower in concept than economic profit. It is simply revenue minus total costs without opportunity cost.

Economic profit, on the other hand, includes the opportunity costs in the total costs.

<h3>Data and Calculations:</h3>

Salary per year at P.E.T.S = $30,000

Annual interest from savings = $500 ($10,000 x 5%)

Revenue in the new business = $50,000

Explicit costs = $10,000

Accounting profit = $40,500 ($50,500 - $10,000)

Economic profit = $10,500 ($50,500 - $10,000 - $30,000)

Thus, Ernie's accounting profit is <u>$40,500</u> and the economic profit is <u>$10,500</u>.

Learn more about accounting profit and economic profit at brainly.com/question/27113609

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4 0

2 years ago

Last year, Myron purchased a $10,000 certificate of deposit with a 3% rate of interest from his bank. The government reported th

Dmitrij [34]

Answer:

Myron gains, while the bank loses.

Explanation:

Fallen in prices is usually cause by deflation i.e a general decrease in the prices of goods and services which enhances the purchasing power of money.

In this case, 5% fall in price will increase the value of the Myron investment with bank and caused bank more money .

8 0

3 years ago

When a company exchanges 200 shares of stock worth $20 each for 100 shares worth $40 each, they are using?

Stels [109]

When a company exchanges 200 shares of stock worth $20 each for 100 shares worth $40 each, they are using reverse stock split.
A reverse stock split is a corporate action in which a firm or a company reduces the number of shares it has outstanding by a set multiple. For example, if a company announces a reverse stock split of 1:50, this means that once the split occurs investors will receive one share for every 100 shares they own.

6 0

3 years ago

A company settles a long-term note payable plus interest by paying $68,000 cash toward the principal amount and Page 565 $5,440

Juli2301 [7.4K]

Answer:

$68,000

Explanation:

The long-term note payable is a debt that is formally established through a written agreement. An example of long-term note payable is a bank loan.

When the principal and the interests of a long-term note are paid, they represent Cash outflows from the business and are recorded in the Cashflow Statement. However, their treatments are different. Another way to put it is that they bring a reduction in the cash of the organisation.

The $68,000 principal amount paid is an outflow from the company that is recorded in the financing activity section of the Cash Flow Statement

The Interest of $5,440 is also an outflow from the business but it is reported in the operating activity section of the Cash Flow Statement. The reason for its report is that it is actually reported in the Organisation's Statement of Income as an expense for the year. It, therefore, qualifies as an operating activity expense or outflow.

7 0

3 years ago

Which action will help increase a low FICO score?

Andreas93 [3]

Reducing credit card balances is the <span>action will help increase a low FICO score.

</span>The FICO mortgage score is between 300<span> and </span>850<span>. Higher scores indicate lower credit risk. Each individual actually has 65 credit scores for the FICO scoring model because each of </span>three<span> national credit bureaus, Equifax, Experian and TransUnion, has its own database.</span>

8 0

3 years ago