All Related Questions of Accounting Profit

Q: Suppose that Sea Shell oil company (SS) is pumping oil

Suppose that Sea Shell oil company (SS) is pumping oil at a field off the coast of Nigeria. At this site, it has an extraction cost of $30 per barrel for the first 10 million barrels it pumps each yea...

Q: The desire to maximize profits can work against racial and other types

The desire to maximize profits can work against racial and other types of discrimination. To see this, consider two equally productive accountants named Ted and Jared. Ted is black, and Jared is white...

Q: You are currently a worker earning $60,000 per year

You are currently a worker earning $60,000 per year but are considering becoming an entrepreneur. You will not switch unless you earn an accounting profit that is on average at least as great as your...

Q: How do the concepts of accounting profit and economic profit differ?

How do the concepts of accounting profit and economic profit differ? Why is economic profit smaller than accounting profit? What are the three basic sources of economic profit? Classify each of the fo...

Q: Please explain whether the following statements are true or false.

Please explain whether the following statements are true or false. a.If the owner of a business pays himself no salary, then the accounting cost is zero, but the economic cost is positive. b. A firm...

Q: A recent issue of Business Week reported the following:

A recent issue of Business Week reported the following: During the recent auto sales slump, GM, Ford, and Chrysler decided it was cheaper to sell cars to rental companies at a loss than to lay off wo...

Q: Wyatt Oil owns a major oil refinery in Channelview, Texas.

Wyatt Oil owns a major oil refinery in Channelview, Texas. The refinery processes crude oil into valuable outputs in a two-stage process. First, it distills a barrel of crude oil at a variable cost of...

Q: Distinguish between a firm’s explicit costs and its implicit costs and between

Distinguish between a firm’s explicit costs and its implicit costs and between a firm’s accounting profit and its economic profit.

Q: Would a business be expected to survive in the long run if

Would a business be expected to survive in the long run if it earned a positive accounting profit but a negative economic profit? Briefly explain.

Q: Suppose an assistant professor of economics is earning a salary of $

Suppose an assistant professor of economics is earning a salary of $75,000 per year. One day she quits her job, sells $100,000 worth of bonds that had been earning 3 percent per year, and uses the fun...

Q: What is the difference between zero accounting profit and zero economic profit

What is the difference between zero accounting profit and zero economic profit?

Q: Dane decides to give up a job earning $200,000

Dane decides to give up a job earning $200,000 per year as a corporate lawyer and converts the duplex that he owns into a UFO museum. (He had been renting out the duplex for $20,000 a year.) His expli...

Q: A business owner makes 1000 items a day. Each day she

A business owner makes 1000 items a day. Each day she contributes eight hours to produce those items. If hired elsewhere, she could have earned $250 an hour. The item sells for $15 each. Production do...

Q: Home Value Stores operates 264 membership warehouse stores in the United States

Home Value Stores operates 264 membership warehouse stores in the United States, Europe, and Asia. The company offers low prices on a limited selection of household and grocery products. In the past y...

Q: Mary Graham worked as a real estate agent for Piedmont Properties for

Mary Graham worked as a real estate agent for Piedmont Properties for 15 years. Her annual income is approximately $100,000 per year. Mary is considering establishing her own real estate agency. She e...

Q: Traditional measures of firm productivity tend to focus on profit margins,

Traditional measures of firm productivity tend to focus on profit margins, the rate of return on stockholder’s equity, or related measures like total asset turnover, inventory turnover, or receivables...

Q: Gotti Manufacturing Inc., a U.S.-based company,

Gotti Manufacturing Inc., a U.S.-based company, operates in three countries in addition to the United States. The following table reports the company’s pretax income and the applicab...

Q: In mid-2000, Enron Corporation and Blockbuster (a division

In mid-2000, Enron Corporation and Blockbuster (a division of Viacom) set up a pilot project, streaming videos to a few dozen apartments in Portland, Oregon, from servers set up in the basement of the...

Q: Various depreciation methods can be used to arrive at an accounting profit

Various depreciation methods can be used to arrive at an accounting profit number. From the viewpoint of the economist, how should annual depreciation be determined?

Q: Petersford plc prepares accounts to 31 December each year. On 1

Petersford plc prepares accounts to 31 December each year. On 1 January 2014, the company acquired a non-current asset at a cost of £256,000 and decided to depreciate this asset on the straight-line b...

Q: A firm in a purely competitive industry is currently producing 1,

A firm in a purely competitive industry is currently producing 1,000 units per day at a total cost of $450. If the firm produced 800 units per day, its total cost would be $300, and if it produced 500...

Q: Linda sells 100 bottles of homemade ketchup for $10 each.

Linda sells 100 bottles of homemade ketchup for $10 each. The cost of the ingredients and the bottles and the labels was $700. In addition, it took her 20 hours to make the ketchup and to do so she to...

Q: Gomez runs a small pottery firm. He hires one helper at

Gomez runs a small pottery firm. He hires one helper at $12,000 per year, pays annual rent of $5,000 for his shop, and spends $20,000 per year on materials. He has $40,000 of his own funds invested in...

Q: Distinguish between accounting profit, economic profit, and normal profit.

Distinguish between accounting profit, economic profit, and normal profit. Does accounting profit or economic profit determine how entrepreneurs allocate resources between different business ventures...

Q: Explain why an increase in cash during a particular accounting period does

Explain why an increase in cash during a particular accounting period does not necessarily mean that an entity has made a profit. Answer: Accounting profit is not normally the difference between c...

Q: The differentiation between the so-called capital and revenue expenditure is

The differentiation between the so-called capital and revenue expenditure is quite arbitrary and unnecessary.’ Discuss. Answer: 1. It is true that the classification of transactions into capital...

Q: Proprietors are more interested in cash than profit.’ Discuss.

Proprietors are more interested in cash than profit.’ Discuss. Answer: 1. In the short term, without an adequate cash flow, an entity will find it difficult to survive; in the longer term the acc...

Q: Accounting ratios are only as good as the data on which they

Accounting ratios are only as good as the data on which they are based.’ Discuss. Answer: 1. Accounting ratios attempt to express in simple terms the relationship between factors that may contain...