Question

Jeri's company reported a profit this year of $228,000. What number would represent her company's profit ?

A. $-22,800
B. $0
C. $228,000
D. $228,000

Answer 1

The correct numerical representation of Jeri's company's profit is C. $228,000. This figure is indicative of the surplus after subtracting explicit costs from total revenues, consistent with standard accounting practices.

Step-by-step explanation:

The question posed deals with understanding what numeric value correctly represents the profit reported by a company. In the scenario provided, Jeri's company reported a profit of $228,000 this year. When dealing with profit, especially in the context of financial statements and accounting, the value is typically represented as a positive number if it is indeed a profit and not a loss. Consequently, the correct numerical representation of her company's profit from the options given would be a positive $228,000.

To better explain this concept, consider the basic calculation of accounting profit, which is the total revenues minus explicit costs. If a firm has sales revenue and spends a certain amount on various explicit costs like labor, capital, and materials, the remaining amount would be their accounting profit. So, if a firm had sales revenue of $1 million and explicit costs totalling $950,000, its accounting profit would be $50,000. In the context of this question, the correct option representing Jeri's company's profit is C. $228,000. This is a direct application of accounting principles, where the profit figure is reported as a positive number reflecting the surplus after all costs have been deducted from the total revenue.

Answer 2

The number that represents Jeri's company's reported profit of $228,000 is C. $228,000, which is the correct positive figure for profit.

Step-by-step explanation:

The student's question asks which number would represent Jeri's company's profit if the company reported a profit this year of $228,000. The correct answer is C. $228,000, which is a positive number indicating that the company has made a profit and not a loss.

Understanding the concept of profit is crucial in business and accounting. Accounting profit is calculated by subtracting all explicit costs from total revenues. For example, if a firm had sales revenue of $1 million and its explicit costs for labor, capital, and materials were $600,000, $150,000, and $200,000, respectively, the accounting profit would be $50,000 as per Chapter 7. Moreover, economic profit considers both explicit and implicit costs, such as opportunity costs like an alternative salary foregone by choosing a particular business venture, which are not factored into accounting profit.