Question

Presented below is information for Kingbird Company. 1. Beginning-of-the-year Accounts Receivable balance was $16,100. 2. Net sales (all on account) for the year were $109,000. Kingbird does not offer cash discounts. 3. Collections on accounts receivable during the year were $81,000. charge of 4%. The fair value of the recourse obligation is $1,165. (a) Your answer is correct.

Answer 1

The accounting profit of a company is calculated by subtracting explicit costs ($600,000 for labor, $150,000 for capital, and $200,000 for materials) from total revenues ($1,000,000), resulting in an accounting profit of $50,000.

Step-by-step explanation:

The student's question pertains to calculating a firm's accounting profit, which is defined as total revenues minus explicit costs. Using the provided information, we can derive that a company with sales revenue of $1,000,000 and expenses for labor, capital, and materials amounting to $600,000, $150,000, and $200,000 respectively, will have an accounting profit of $50,000. This is calculated by subtracting the sum of all explicit costs from the total revenues, resulting in the final answer for the accounting profit in two line explanation of the firm's profitability.