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22 April, 02:02

Kumar owns a small seafood restaurant, where he works full-time in the kitchen. His total revenue last year was $100,000, and his rent was $3,000 per month. He pays his one employee $2,000 per month, and the cost of ingredients and overhead averages $500 per month. Kumar could earn $35,000 per year as the manager of a competing seafood restaurant nearby. His total accounting profit last year was:

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  1. 22 April, 02:26
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    Accounting proft 36,000

    Explanation:

    revenue 100,000

    rent expense

    3,000 x 12 month 36,000

    salaries expense

    2,000 x 12 month 24,000

    other operating expense

    500 x 12 month 6,000

    Total expenses (66,000)

    Accounting proft 36,000

    he accounting do not consider the opportunity cost, that would bethe economic profit.

    The accounting only recognize accrued expenses, not potencial income.
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