Final answer:
When Staples receives inventory from Xerox, it will debit inventory and credit either accounts payable or cash, depending on the payment method.
Step-by-step explanation:
Staples would debit the inventory account on the balance sheet, which represents an increase in assets. Concurrently, Staples would credit an accounts payable account on the balance sheet if the inventory purchase is on credit, representing a liability.
If the purchase has been made with cash, then an alternative would be to credit the cash account, which would represent a decrease in the company's cash balance. This accounting activity ensures that the principles of the accounting equation (Assets = Liabilities + Equity) are maintained.
To calculate the firm’s accounting profit, you would subtract the total expenses from the sales revenue. In this case, the firm had sales revenue of $1 million and total expenses of $950,000 ($600,000 for labor, $150,000 for capital, and $200,000 for materials), resulting in an accounting profit of $50,000.