Question

Using T Account to answer questions

A motor van is bought for $6,500 cash in August 2017.
Paid supplier by cash $2,000 on 10th June 2020.

Answer 1

The accounting profit is calculated by subtracting explicit costs from the total revenues, which in this case amounts to $50,000 based on the given financial figures.

Step-by-step explanation:

When assessing the financial transaction of a motor van purchase and payment to the supplier, it is important to consider the principles of accounting. To calculate the accounting profit, we deduct the explicit costs from total revenues. If a firm had sales revenue of $1 million, and they spent $600,000 on labor, $150,000 on capital, and $200,000 on materials, the calculation of accounting profit would be as follows: $1,000,000 - ($600,000 + $150,000 + $200,000), which equals $50,000.