Question

A company receives $10000 in cash for services. What is the amount received by the company?

1) $1000
2) $5000
3) $10000
4) $15000

Answer 1

The company received $10,000 in cash for their services, making the correct answer option 3) $10,000. Additionally, an accounting profit example was given, where a firm's profit is calculated as total revenues minus explicit costs, resulting in an accounting profit of $50,000.

Step-by-step explanation:

The company receives $10,000 in cash for services. Therefore, the amount received by the company is option 3) $10,000.

Accounting Profit Calculation

In reference to the self-check question, to calculate a firm's accounting profit, we subtract the explicit costs from the total revenues. Based on the provided information, the calculation would be as follows:

Accounting profit = Total revenues - Explicit costs

Accounting profit = $1,000,000 - ($600,000 + $150,000 + $200,000) = $50,000

Therefore, the firm's accounting profit would be $50,000 for last year.