Question

Suppose that a small family farm sold its output for $100,000 in a given year. The family spent $25,000 on fuel, $40,000 on seed, fertilizer, and pesticides, and $25,000 on equipment, including maintenance. The family members could have earned $20,000 working at other occupations. What is the accounting profit for the family farm?

Answer 1

Given oppurtunity cost in an account. The family's net profit is $10,000, but in accounting terms it would be ($10,000).