Final answer:
The profit and loss statement includes revenue but not accounts like Accounts Payable, Inventory, or Long-term Debt, which are on the balance sheet. The firm's accounting profit is calculated as total revenues minus explicit costs, totaling $50,000 in this scenario.
Step-by-step explanation:
Profit and Loss Statement Components and Accounting Profit Calculation
The accounts that would be included in a profit and loss statement (P&L) are typically those that relate to the company's revenue and expenses during a specific period. Revenue would be included, as it represents the income generated from normal business operations. However, Accounts Payable, Inventory, and Long-term Debt are not included in a P&L statement since they represent liabilities and assets found on the balance sheet.
Concerning the calculation of a firm's accounting profit, based on the provided information, the equation for the accounting profit would be:
Accounting Profit = Total Revenues - Explicit Costs
In this case:
- Sales Revenue = $1,000,000
- Costs (Labor + Capital + Materials) = $600,000 + $150,000 + $200,000
- Total Costs = $950,000
Therefore, the firm's accounting profit would be:
Accounting Profit = $1,000,000 - $950,000 = $50,000.