Question

Jones corp. reported current assets of $187,000 and current liabilities of $martinez corporation reported net sales of $769,000, net income of $138,000, and total assets of $7,674,336. the profit margin is: on its most recent balance sheet. the current assets consisted of $63,200 cash; $44,800 accounts receivable; and $79,000 of inventory. the acid-test (quick) ratio is:

Answer 1

To calculate the firm's accounting profit, subtract the total explicit costs ($950,000) from the sales revenue ($1,000,000). The resulting accounting profit is $50,000.

Step-by-step explanation:

Calculation of Accounting Profit

The question asked involves calculating the accounting profit for a firm given specific financial information about its revenues and expenses. The firm in question had a sales revenue of $1 million last year. To find the accounting profit, we subtract explicit costs (which are direct, out-of-pocket costs) from the total revenues. Explicit costs here include $600,000 spent on labor, $150,000 on capital, and $200,000 on materials. Therefore, the accounting profit is calculated as follows:

Accounting Profit = Total Revenues - Explicit Costs

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

= $1,000,000 - $950,000

= $50,000.

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